1. Government and the Economy
Chapter 16 Section 1 and 2
Government and the Economy

2. Clip of the Day

4. Growth of Government
Beginning with the Great Depression the size and scope of federal government has grown greatly.
Why?
Is this good or bad?

5. Public Works Projects
Publicly used facilities built with public money (Ex. Schools, highways)
Public Goods – Goods or services provided by government for consumption by the general public. Can be provided by federal, state, and/or local governments.

6. Types of Goods Government Supplies
National defense, police/fire, merit goods, social-insurance programs, public-assistance programs, regulate the economy and create stability.
Merit Goods – Goods that are deemed socially desirable by the public (Example – Museums and parks)
Demerit Goods – Goods that are unaccepted (ex. smoking, drinking) – Often heavily taxed by government to discourage usage – “Sin Tax”

7. Promoting the General Welfare
Social-Insurance Programs – Programs that pay benefits to retired and disabled workers, their families, and the unemployed.

8. Ex.
Social Security – Federal program that provides monthly payments to people who are retired or unable to work.
Medicare – Healthcare for retired workers

9. Cont.
Workers Compensation – State program that provides payments for medical care for workers who are injured on the job.
Unemployment Insurance

10. Public Assistance Programs
Public-Assistance Programs (Welfare) – Need based programs
Supplemental Security Income
Temporary Assistance for Need Families
Medicaid

11. Regulation and Economic Stability
Externalities – Side effects (can be negative or positive)
Economic Stability
Intervention against harmful effects of economy (unemployment, high inflation, recessions)

12. Critics of Government Involvement
Merit Goods – Should be private
Government Assistance Programs – Discourage motivation