Government’s Role in the U.S. Economy Miss Smith 7th Grade Civics *pgs. 565-568 (21.3)

Government Regulation Five main goals Protect workers Protect consumers Limits negative effects Encourages competition Regulates property

Protect Workers The Equal Employment Opportunity Commission (EEOC) prohibits businesses from discriminant actions The Occupational Safety and Health Administration (OSHA) makes sure employees have safe working conditions

Protecting Consumers The Food and Drug Administration (FDA) protects people from unsafe medicines and food The Consumer Product Safety Commission (CPSC) makes certain that items, such as toys, are not dangerous Can you think of another gov. agency that protects consumers? FDIC

Limiting Negative Effects The Environmental Protection Agency (EPA) regulates industries to prevent air and water pollution

Encouraging Competition The U.S. Department of Justice and the Federal Trade Commission (FTC) supervise corporate behaviors to make sure companies fairly compete with one another

Regulating Private Property Zoning laws limit certain types of economic activities to specific areas Ex: A zoning law may allow a factory to be built in an industrial area but ban it in a residential area

Fiscal Policy Taxes Public Transfer Payments Higher taxes means citizens can’t buy as many goods or services, so the economy slows down Lower taxes means citizens have more money to spend on goods and services, so the economy speeds up Public Transfer Payments The government provides unemployment compensation so citizens can still buy goods and services while unemployed Why do you think fiscal policy sometimes takes a long time to affect the economy? It takes time for the government to set up and approve a policy

Monetary Policy Easy-money policy: strategy to increase the amount of money in the supply to encourage growth because it increases demand Tight-money policy: strategy to decrease the amount of money in circulation to slow economic growth Open-market operations: buying and selling government bonds Reserve requirement: amount of money banks must have available at all times If you were a business owner and you knew that the Fed was planning to decrease the money supply, what might you do? You might borrow any money you need before interest rates go up and you might not plan to expand your business in the near future