The Role of Government in the U.S. Economy SOL 13 The Role of Government in the U.S. Economy

SOL 13a-Competition and Gov’t Agencies The gov’t promotes and regulates marketplace competition

Ways the gov’t promotes marketplace competition: 1. Enforcing antitrust legislation to discourage the development of monopolies. 2. Engaging in global trade. 3. Supporting business start-ups

Government agencies that regulate business: 1. FCC (Federal Communications Commission) 2. EPA (Environmental Protection Agency) 3. FTC (Federal Trade Commission) These agencies oversee the way individuals and companies do business

SOL 13e-Consumer and Property Rights The U.S. gov’t passes laws and creates agencies to protect consumer rights and property rights. Individuals have the right of private ownership, which is protected by negotiated contracts that are enforceable by law.

Government agencies establish guidelines that protect public health and safety. Consumers may take legal action against violations of consumer rights.

13b-Public goods and services Government provides certain goods and services that individuals and businesses acting alone cannot provide efficiently.

Characteristics of most goods and services provided by the government 1. Provide benefits to many simultaneously. 2. Would not likely be available if individuals had to provide them. Include such things as interstate highways, postal service and national defense.

Ways governments pay for public goods and services: 1. Through tax revenue 2. Through borrowed funds 3. Through fees (e.g. park entrance fees)

SOL 13c-Gov’t Taxing, Spending and Borrowing The gov’t taxes, borrows and spends to influence economic activity.

Gov’t tax increases reduce the funds available for individual and business spending When my taxes are higher—I have less money to spend. Gov’t tax decreases increase funds for individual and business spending. When my taxes are lower—I have more money to spend.

Increased gov’t borrowing reduces funds available for borrowing by individuals and businesses When the gov’t borrows more money—there is less for me to borrow Decreased gov’t borrowing increases funds available for borrowing by individuals and businesses. When the gov’t borrows less money—there is more for me to borrow

Increased gov’t spending increases demand, which may increase employment and production. When the gov’t spends money to help the economy—it can help businesses to grow. Decreased gov’t spending reduces demand, which may result in a slowing of the economy. When the gov’t doesn’t spend as much money in the economy—it doesn’t grow as quickly.

Increased gov’t spending may result in higher taxes When the gov’t spends more money—they will increase taxes to make it up. Decreased gov’t spending may result in lower taxes When the gov’t spends less money—they can lower taxes.

The 16th Amendment The 16th Amendment to the U.S. Constitution authorizes Congress to tax personal and business income.

SOL 13d: Federal Reserve System The Federal Reserve System is our nation’s central bank.

As the central bank of the United States, the Federal Reserve System: 1. Has the duty to maintain the value of the national currency (dollar). 2. Regulates banks to ensure the soundness of the banking system and the safety of deposits.

As the central bank of the United States, the Federal Reserve System As the central bank of the United States, the Federal Reserve System..continued 3. Manages the amount of money in the economy to try to keep inflation low and stable 4. acts as the federal government’s bank

13f-Forms of Money Money is defined as anything that is generally accepted as a method of payment. When the U.S. government issues coins and currency, people accept it in exchange for goods and services because they have confidence in the gov’t. Gov’t issues money to facilitate this exchange.

The three types of money generally used in the United States are: 1. Federal Reserve notes (currency) 2. Coins 3. Deposits in bank accounts that can be accessed by checks and debit cards.