CHAPTER 12

Role of Government
SECTION 1: Growth of Government SECTION 2: Economic Goals SECTION 3: Government and the Public

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SECTION 1

Growth of Government

Objectives:
 What factors influence the growth of government?  Why have government expenditures increased over time?  How do federal, state, and local governments spend their money?
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SECTION 1

Growth of Government

Factors that influence the growth of government:
 population growth  changing public attitudes  a rising standard of living  national emergencies

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SECTION 1

Growth of Government

Government spending has grown to pay for government programs.

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SECTION 1

Growth of Government

Government spending:
 natural resources—federal  insurance—federal and state  corrections—state  hospitals and health—local and state  highways—local and state  law enforcement—local  fire protection—local  sewerage—local
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 housing and community development—local  interest—federal, state, and local  public welfare—federal, state, and local  education—federal, state, and local  government administration— federal, state, and local

SECTION 2

Economic Goals

Objectives:
 Why does the government regulate businesses?  How does the government work to provide public goods?  In what ways does the government promote individuals’ well-being?  How does the government work to stabilize the economy?
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SECTION 2

Economic Goals

Reasons government regulates businesses:
 preventing abuses  protecting consumers  limiting negative externalities  promoting competition

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SECTION 2

Economic Goals

Ways the government works to provide public goods:
 by sharing funding and distribution of public goods among all levels of government  through privatization

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SECTION 2

Economic Goals

Ways the government promotes individuals’ well-being:
 by improving the standard of living  by redistributing income

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SECTION 2

Economic Goals

Ways the government works to stabilize the economy:
 by moderating the business cycle  by responding to market failures

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SECTION 3

Government and the Public

Objectives:
 How does the government determine the public interest?  What consequences may result from government promotion of the public interest?  How can individuals and interest groups affect government policies?
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SECTION 3

Government and the Public

Government determines the public interest by identifying the collective needs of many people over the wishes of an individual or specific group.

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SECTION 3

Government and the Public

Potential consequences of government public-interest policies:
 higher prices  declines or increases in service levels  reductions or increases in profit  decreases in productivity

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SECTION 3

Government and the Public Ways to influence government policies
 Individuals:
 by voting in elections  by becoming informed about issues, policy, and

candidates  through political activism

 Interest groups:
 by donating money to political campaigns  by encouraging groups to vote for a particular candidate  by hiring lobbyists to express the group’s point of view
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CHAPTER 12

Wrap-Up
1. What are the key factors that encourage government expansion? 2. What are the main purposes of government regulation of businesses? 3. Why do governments provide public goods? 4. How does the government promote economic wellbeing? 5. How does the government work to promote the public interest? 6. What effects can regulation have on prices, service, profits, and productivity?
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