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 well-
being?
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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