1. Chapter 16: Government Role in the Economy
We will look at four areas:
1. Government intervention
2. Government oversight
3. Government protection
4. Government income

2. Government Intervention
1. How does government regulate business?
Safety standards in the workplace
Minimum Wage
Hours worked/overtime requirements
Product safety standards (Food, drugs, product liability, etc.)

3. Government Intervention
2. Government makes direct payments to people.
Welfare payments
Food stamps/subsidies
Subsidized housing
Medicaid
Social Security (but you invest in that too)
Disability payments

4. Government Intervention
3. Government owns resources
Government provides public parks
Government provides free beaches
Government provides public dams
Government provides roads, bridges, tunnels
Government provides safety facilities
Sometimes the government charges you to use these things but cost is minimal.

5. Government Intervention
4. Government makes payments to businesses
Subsidy payments to farmers
Impact of this is that cheaper food is made available but it is not necessarily the healthiest choice and therefore is creating an obese nation.
Subsidy payments to tobacco
Why pay tobacco farmers money to subsidize the continuation of tobacco when you are spending money trying to get young people to stop smoking.

6. Government Intervention
5. Government collects taxes to pay for services provided and to pay off debts.
Individuals would have more money to spend if there were not taxes, but, what are taxes used for?
Taxes go to pay for all government services from the military to welfare and everything in between.

7. Government Oversight
The government is “watching” to ensure your safety and that business is in compliance with government rules and regulations on products, labor and the economy.
Now, lets look at examples of the government as a “watchdog.”

8. Government Oversight 1. A trust. What is a trust?
When a group of companies conspire to fix prices.
2. A monopoly. What is a monopoly?
When a single individual or company controls a market. Famous U.S. example?
3. Business cycle: Just that – business is sometimes good and sometimes bad.

9. Government Oversight 4. Monetary Policy: What is it?
Regulation and control of the money supply. This is what the Federal Reserve does. Remember?
5. Fiscal Policy: What is it?
The government budget. How much money will be collected in taxes and then how will you spend it.

10. Government Protection
1. Deficit: What is it?
When your spending is greater than your income. This is our problem in the U.S. now.
2. Surplus: What is it?
When your spending is less than your income.
3. National Debt: What is it?
National debt is what the government owes to its lenders. How much has it borrowed is the national debt plus the owed interest.
GDP: Gross Domestic Product: The total value of goods sold in United States
GNP: Gross National Product: Total value of goods sold by American companies in the world.

11. Why does everyone look to the U.S.?
GDP 2016
World: $75,593,376,000,000
E.U.: $18,495,697,000,000
Remember this is 28 countries combined!
China: $ 10,983,894,000,000
Japan: $ 4,123,731,000,000
Brazil: $ 1,773,039,000,000
U.S.: $18,400,000,000,000
This is why “a buck is worth a buck.”

12. Government Protection
Government agencies and programs:
Food and Drug Administration
Remember “The Jungle,” by Upton Sinclair
Consumer Product Safety Commission
Product is found to be dangerous
Federal Communication Commission
Restricts what you see & hear on TV, etc.
There are many others but these are good examples.

13. Government Income
Where does the government get its money? Three main sources:
1. Federal Income Tax: Main source of income
2. Federal Excise Taxes: Tax on certain products. Most popular products taxed are what? Examples:
Cigarettes
Gasoline

14. 3rd source of Federal income
3. Tariffs and Fees
Tariffs to import products to the U.S.
Fees charged to visit a national park.
Fees on a toll road or bridge.
Federal licensing fees for television and radio stations