Chapter 3: Role Of Government By Mike Cedeno, Red Hampton, Montez Walker

Section 2 Promoting Growth and Stability Tracking Business Cycles  Even under a enterprise system, the government tries to influence macroeconomic trends. Macroeconomics is the study of economic behavior and decision-making in a nation’s whole economy. Microeconomics is the study of economic behavior and decision-making in small units, such as households and firms. GPD and the Business Cycle.  One measure of a nation’s economic well being is Gross Domestic Product (GDP), is the total value of all goods and services produced in a country in a given year. So When the country produces more then the GDP goes up, when the country produces less the GDP goes down. This pattern of a period of expansion, or growth, followed by a period of contraction, is called a Business Cycle.

Section 3 Providing Public Goods Public Goods our a shared good or service that would be inefficient or impractical to make consumers pay individually and to exclude those who did not pay. Public goods are financed by the public sector, the part of the economy that involves transactions of the government. The private Sector is the part of the economy that involves transactions of individuals and businesses would the incentive to produce public goods. Free Riders is someone who would no be willing o pay for a certain good or service, but would get the benefit of it anyway if it was provided by a public good. Markey Failure are examples of public goods, when it does not distribute resources efficiently. Externalities are.economic side effects of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume. Beneficial side effect are positive externalities. Unintended costs, are called negative ecternalities.

Section 4 Providing a Safety Net Welfare refers to government aid to the poor. It includes many type of programs that redistribute wealth from some people to others. Poverty Threshold is an income level below that is needed to support families. The poverty threshold is determined by the federal government. Cash Transfers are provided by the State and federal government, they are direct payments of money to the poor, disabled, or retired people. Examples of Cash Transfer programs. Temporary Assistance for Needy Families (TANF)- Aims to move people from depending on welfare to joining the workforce. Social Security- The program collects payroll taxes from current workers and redistributes that money to current recipients. Those who may receive Social Security are retired people, people with disabilities, and in some cases widows, spouses, and orphaned children. Unemployment Insurance- Compensation checks provide money to workers who have lost their jobs. Recipients must show proof that they have made efforts to get work. Worker’s Compensation- This program is an insurance program for workers injured or disabled on the job. The government also provides poor people with In-Kind Benefits, goods and services provided for free or at greatly reduced prices.

Roles of Government Regulating Business Examples 1.Public disclosure 2.Environmental rules 3.Consumer safety Promoting Growth 1.Price stability 2.Regulations of banks 3.Patents and copyrights Providing Public Goods 1.Roads and bridges 2.Defense 3.Police and fire department Providing a Safety Net 1.Social security 2.Unemployment insurance 3.Madicare

Public Goods and Government