Role of Government in Economics - 1028 Words

Role of Government The government provides the legal framework and the services needed for a market economy to operate effectively. The legal framework sets the legal status of business enterprises, ensures the rights of private ownership, and allows the making and enforcement of contracts. Government also establishes the legal rules of the game that control relationships among business, resource suppliers, and consumers. Discrete units of government referee economic relationships, seek out foul play, and impose penalties. Government intervention is presumed to improve the allocation of resources. By supplying a medium of exchange, ensuring product quality, defining ownership rights, and enforcing contracts, the government increases†¦show more content†¦The main categories of Federal spending are pensions and income security, national defense, health, and interest in the public debt; Federal revenues come primarily from personal income taxes payroll taxes, and corporate inco me taxes. Each state derive their revenue primarily from sales and excise taxes and personal income taxes; on the other hand, major state expenditures go to education, public welfare, health and hospital, and highways. Local communities derive most of the revenue from property taxes; education is their most important expenditure. Over the years, the tax collections of both state and local government have fallen substantially short of the expenditures. Such shortfalls are largely filled by Federal transfers or grants. It is not common for 20 to 25 percent of all revenue received by state and local government to come from the Federal government. In addition, to Federal grants to state and local government, the states also make grants to local governmental units. According to the U.S. Department of Information Programs, America points to its free enterprise system as a model for other nations. The country s economic success seems to validate the view that the economy operates best when government leaves businesses and individuals to succeed -- or fail -- on their own merits in open, competitive markets. But exactly how free is business in America s freeShow MoreRelatedThe Government Should Play an Active Role in Managing an Inflationary Economy983 Words   |  4 PagesThe government should play an active role in managing an inflationary economy. I agree that the government should play an active role in managing an inflationary economy. Buck (2011), stated that â€Å"The overwhelming majority of economists around the world believe it is appropriate for the government to take actions to promote economic growth and maintain low unemployment and low inflation.† Parkin (2012: 522) described inflation as â€Å"a persistently rising price level† and price level as â€Å"theRead More Role Of Government In Mixed Economies Such As Australia Essay1741 Words   |  7 Pages Role of Government in Mixed Economies Such As Australia What role do governments have in modern mixed economies such as Australia? Using appropriate indicators (macro economic aggregates) outline the present state of the economy. In what ways is the Commonwealth government using fiscal and monetary policies to influence the Australian economy? What are the main features of the governments micro economic policy? Why is the government concerned about microeconomic reform? Synopsis: The role ofRead MoreGovernment Policies and Economic Growth Essay1138 Words   |  5 Pagesnatural resources, and technology (Mankiw, 2012). The government plays an important role in an economy’s growth rate. They achieve their influence on the growth rate through their implementation of several government policies. These policies not only influence the economy’s growth rate, but also play a significant role in day-to-day life. Government policies on savings and investments play an important role in influencing both the economic growth rate and day-to-day lives. A country’s savingRead MoreChinas Economic Growth Process in a Nutshell1688 Words   |  7 PagesIntroduction: China has achieved brisk economic growth since late 1970’s, with an average annual growth rate of 9.8% over the past 27 years. Such economic growth owes not only to economic reform began at the end of 1978, when the third session of the Central Committee of the 11th National Congress of Chinese Communist Party was held and later regarded as a landmark in the existing Chinese history, but also to administrative reform accompanying with economic reform. Administrative reform has beenRead More Asian Essay946 Words   |  4 PagesMarkets The Asian financial markets can be compared to the economic philosophy of mercantilism, which is regulated commerce to produce a favorable balance of trade. Governments regulate production techniques to ensure the quality of exports, and in general, subsidize production in their exporting industries. Tariffs can be high on imported manufactured goods and low on imported raw materials. The state exercises much control over economic life in these environments, chiefly through corporations andRead MoreAnimal Spirits : How Human Psychology Drives The Economy1602 Words   |  7 Pagesresponsible for this crisis which still has effects upon the entire population from all over the world. Professors George A. Akerlof and Robert J. Shiller are two recognized economists who made numerous pieces of research to emphasize the link between Economics and Psychology. In their book Akerlof and Shiller introduce the concept of â€Å"animal spirits† and how the world’s economy is driven by this. According with their view, these â€Å"animal spirits† are composed of: confidence, fairness, antisocial behaviourRead MoreThe Role of Government in Economy1216 Words   |  5 Pagesdebates on how far government should interfere with the economy. Government has played an impact on the economy with the purpose to maximize the well-being of society. What governments generally do is to assure the economy grows at a steady pace, increase level of employment and stabilize the price level. However, whether government should take active policies to interfere with economy or just let it grow naturally has raised widely discussion. This essay discusses the role of government by analyzing bothRead MoreEast Asia is a diverse region housing some of the largest nations in the world as well as some of1300 Words   |  6 Pagesterms of economic success and growth. According to Thomas Leipziger, (Leipziger, 3) The East Asian countries have a record of maintaining political and economic stability and of pursuing long-term economic goals. The success of East Asia has led to much scrutiny over the role of the Government contributing towards its success. Although there might be many factors involving the success of East Asia, it is reasonably fair to say that the Government does play a large and critical role in theRead MoreLocal Economic Development For The City Of Johannesburg South Africa1428 Words   |  6 Pagesrecommendations for the local economic development for the city of Johannesburg South Africa. These recommendations are put forward to identify local strategies and actions that may be used to assist with the retention of workers within the South African economy, grow the work force and maximize opportunities for economic growth. . Local economic development involves identifying and utilizing local resources in creating opportunities for economic growth and employment. Successful local economic development dependsRead MoreHow Has The Constitution Shaped The Economic System1168 Words   |  5 PagesHow has the Constitution shaped the economic system in the United States? The Unites States Constitution was created in 1787, and is the supreme law of this nation. It is the backbone on which laws to follow and how we live today. There are six characteristics of a market economy. Which as follows; Private property, Freedom of enterprise and choice, Motive of self-interest, competition, markets and prices and limited role of government. One of the first economic concepts is â€Å"Freedom of Enterprise