1. Examine the role of the government in the US economy. The US is a mixed economy with private and public sector. The government has a crucial role in finding a balance between efficiency and equity.

2. Role of gov’t in economy cont… 1.Regulator of private businesses: a) Ensuring competition in markets (Federal Trade Commission, anti- trust division of the Justice Dept, Federal Communications Commission etc…) Why would the gov’t tolerate concentrated ownership in industries today?

3. Role of gov’t in economy cont… b) Dealing with externalities such as air pollution. 1963 Clean Air Act, 1964 Water Pollution Control Act, 1970 creation of EPA … 2. Deregulator: 1977 Airlines Deregulation Act since then energy, banking (S&Ls) and communications industries have been deregulated.

4. Role of gov’t in economy cont… 3. Gov’t as promoter of economic interests: a)Loans & tax breaks – guarantees, direct loans, tax credits and deductions. b)Tariffs on foreign goods and services. c)Education, transportation and defense (infrastructure development).

5. Role of gov’t in economy cont… d) Labor laws: minimum wage, anti- discrimination laws, unemployment benefits, rights to unionize (1935) e) Retired: Social security & medicare f) Agriculture: Homestead Act 1862. Farm subsidies cost over $ 20 billion today.

6. Role of gov’t in economy cont… 4. Fiscal Policy (tax and spend): Maintaining high productivity, employment, growth and stable prices and interest rates. 5. Monetary policy: Controlled by Federal Reserve Board (7 members), they regulate the activities of banks and have a big impact on interest rates. 6. Trade Policy.