Economic functions of the government.

Government is the political system by which a country or a community is administered and regulated
and it consist or made up,with the legislature, executive and judiciary, the government have different
role such as provision of needs and wants to the people.

The following are the economic functions of the government:

Provision of public goods and services:The government provide national parks such as in Tanzania
there are Serengeti national park,that we can enjoy and also they ensure we all feel safe through an
adequate defence program.,not only that but also the government offers public service Example public
schools, transportation and fire services, because it's too risky to be left in the hand of private.

To correct externalities:The externalities are effects of business decisions that can affect people or
parties that had no control over decision in the first place. Example factory pollution, the factory
produce product that are needed in economy such as pet food in making that, it can create a lot of
pollution that can cause health problems to the people.

The government regulates legal and social framework. The government helps ensure that legal
contracts for businesses are enforceable through a court system so due to that, for example helps keep
all people accountable when doing business together.

Stabilization of the economy:The government should reduce unemployment and inflation and
promote economic growth, also should stabilise the economy Example through application of fiscal
policy by rising or lowering taxes or by the government spending and monetary policy for Example by
controlling the money supply or by changing interest rate.

To redistribute income;The government are redistribute income from people who have higher
incomes to those with lower incomes, for Example redistribution usually involves higher tax rates for
people with higher incomes,when the tax revenue raised in this way helps to pay for various welfare
programs such as legal defence clinic.

To maintain or ensuring competition. The government create and enforce antitrust laws and
regulate natural monopolies Example the government regulates the prices charged by companies that
distribute natural gas.

To raising the taxes:To provide public services and public goods the government needs to raise the
tax, so they can do that through customer duties, taxes on income, taxes on people not only that but
also the government look on the best way of raising tax because a good tax is efficient which does not
distort the economy, and easy to collect and fair.

To increase efficiency;The government may promote macroeconomic stability through changes in

government spending and taxation for Example, when total spending is too low the government may
increase its spending or lower taxes to reduce unemployment and the central bank also may lower
interest rate.
 Generally apart from that there are factors which make the government to fail to perform its
function in economy like government intervention, natural calamities like earthquakes, floods and
droughts and also economic instability.

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