1

Role of GovernmentRole of GovernmentSECTION 1: Growth of Government

SECTION 2: Economic Goals

SECTION 3: Government and the Public

CHAPTER 12

2

Objectives: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?

Growth of GovernmentGrowth of GovernmentSECTION 1

3

Factors that influence the growth of Factors that influence the growth of government:government:population growthchanging public attitudesa rising standard of livingnational emergencies

Growth of GovernmentGrowth of GovernmentSECTION 1

4

Government spending has grown to Government spending has grown to pay for government programs.pay for government programs.

Growth of GovernmentGrowth of GovernmentSECTION 1

5

Government spending:Government spending:natural resources—federal insurance—federal and state corrections—state hospitals and health—local

and statehighways—local and state law enforcement—local fire protection—local sewerage—local

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

Growth of GovernmentGrowth of GovernmentSECTION 1

6

Objectives: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?

Economic GoalsEconomic GoalsSECTION 2

7

Reasons government regulates Reasons government regulates businesses:businesses:preventing abusesprotecting consumers limiting negative externalitiespromoting competition

Economic GoalsEconomic GoalsSECTION 2

8

Ways the government works to Ways the government works to provide public goods:provide public goods:by sharing funding and distribution of public

goods among all levels of government through privatization

Economic GoalsEconomic GoalsSECTION 2

9

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

Economic GoalsEconomic GoalsSECTION 2

10

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

Economic GoalsEconomic GoalsSECTION 2

11

Objectives: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?

Government and the PublicGovernment and the PublicSECTION 3

12

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

Government and the PublicGovernment and the PublicSECTION 3

13

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

Government and the PublicGovernment and the PublicSECTION 3

14

Ways to influence government policiesWays 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

Government and the PublicGovernment and the PublicSECTION 3

15

1.1. What are the key factors that encourage government expansion?

2.2. What are the main purposes of government regulation of businesses?

3.3. Why do governments provide public goods?4.4. How does the government promote economic well-

being?5.5. How does the government work to promote the

public interest?6.6. What effects can regulation have on prices, service,

profits, and productivity?

Wrap-UpWrap-Up

CHAPTER 12