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The government fulfills many roles and performs many activities in business. 2

The government: –increases/decreases tax rates –regulates amount of money in the economy with the Federal Reserve Bank –negotiates international treaties and trade agreements 3

Acts passed to ensure competition: –Sherman Antitrust Act of 1890 allows the government to break up companies with control of a market prevents monopolies –Clayton Antitrust Act of 1914 passed to amend and clarify the Sherman Antitrust Act –Federal Trade Commission Act of 1915 established the Federal Trade Commission 4

Federal Trade Commission –promotes fair competition –prevents false/deceptive advertising 5

Regulation –is when the government sets strict rules affecting businesses within certain industries Deregulation –is the removal or relaxation of the rules affecting businesses within certain industries 6 Did you know? There has been a movement toward deregulation in many industries since the 1970s.

The government: –provides information and training –publishes information businesses can use rate of inflation, unemployment, consumer spending –provides direct loans, loan guarantees and subsidies of various types –established the Small Business Administration provides low-cost loans, advice and other assistance to small businesses 7

The government regulates: –public schools, which offer instruction in skills relating directly to jobs in business –funding for rehab and retraining of workers –state and local employment agencies 8

The government buys goods and services provided by private industry The government constructs and provides maintenance for transportation systems 9

The government creates laws and agencies protecting the eight basic rights of the consumer Examples include: –Consumer Product Safety Commission –Fair Packaging and Labeling Act –Fair Credit Reporting Act 10

Employees are protected through numerous government legislations designed to do the following: –provide a safe work environment –provide freedom from discrimination and harassment –protect from unlawful termination –ensure certain rights to privacy –provide the right to participate in labor unions –establish minimum wage 11

Laws require corporations to disclose information affecting shareholders’ investment decisions, such as financial statements Shareholders have the right to vote on major decisions affecting the company 12

Shareholders are entitled to receive dividend payments if the board declares dividends for the company’s stock Shareholders are prevented from gaining an advantage at the expense of other shareholders through insider trading laws 13

Environmental Protection Agency (EPA) –was established in 1970 –was created to protect the natural environment in which we live –stresses clean air, land and water –creates laws to prevent businesses from harming the environment 14

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16 Goods and services provided by the government are paid for through various taxes Income from taxes is used to fulfill previously discussed roles and activities

Are a percentage of total income deducted from your paycheck Are a graduated tax – the more money you make, the higher percentage of taxes you pay Are also paid by sole proprietorships and partnerships on business profits 17

Examples include: –Federal Individual Income Tax –State Individual Income Tax –Social Security Tax (FICA) 18

Are federal taxes paid on corporate profits Are also imposed by state, local and foreign governments 19

Are paid by businesses on land, structures and other property owned Are added to the price of goods and services at the time of purchase Are added to merchandise sold at the retail level 20

Are designed to control potentially harmful practices Are automatically included in the price Produce income which must be used for a purpose related to the tax 21

Examples of items with excise taxes include: –gasoline –tobacco –alcoholic beverages –air travel 22

Are also called import taxes Are fees imposed on goods brought into the country Are designed to protect U.S. businesses against foreign competition Raise the price of imports to a level comparable to the price of domestic merchandise 23

Are a special tax placed on foreign goods sold in the United States Are used to achieve one of two effects: –lower prices and increase imports (reduce tariffs) –raise prices and reduce imports (increase tariffs) 24

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Executive Branch –headed by the U.S. President Legislative Branch –includes the two houses of Congress House of Representatives Senate Judicial Branch –is the U.S. courts 26

Include: –statutory law –administrative law –Judicial Law 27

Is written by the legislative branch For example: –the Uniform Commercial Code (UCC) is a set of standardized laws governing business transactions is adopted in most states throughout the United States 28

Is rules, regulations and interpretations of statutory law set forth by administrative agencies and commissions Is enforced on corporations by administrative agencies 29

Justice System Precedence set by previous cases Ex: discrimination against race, gender, age, etc. 30

Labor Unions –are organizations formed to represent workers and prevent unfair labor practices –has members who are typically employees of the same type of occupation or industry Wagner Act of 1935 –is also known as the National Labor Relations Act –gives workers the right to organize a union and bargain with management 31

Is when union representatives and management come together to discuss issues arising between employees and employers Union workers strike when an agreement cannot be reached Examples for discussion include: –pay, working conditions, work hours, benefits 32

Stopped the following: –featherbedding labor unions forcing companies to hire unnecessary workers –closed shops requiring businesses to hire only union members Legalized the following: –right-to-work laws allows employees the right to work for a company whether or not they decide to join the union 33