economics lap 16 describe how government is involved in business. objective
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Describe how government isDescribe how government isinvolved in business.involved in business.
ObjectiveObjective
GovernmentGovernment’’s Original Intentionss Original Intentions
• To protect business propertyTo protect business property Fire, police, militaryFire, police, military Trademarks, copyrights, Trademarks, copyrights,
patentspatents
• To enforce business To enforce business contractscontracts
• To settle business To settle business disagreementsdisagreements
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GovernmentGovernment’’s Original Intentionss Original Intentions
• To set and collect taxesTo set and collect taxes As well as tariffs:As well as tariffs:
Extra taxes on Extra taxes on imported productsimported products
Promote the sale of Promote the sale of American-made American-made productsproducts
Why GovernmentWhy Government’’s Role Changeds Role Changed
• Growth and expansionGrowth and expansion More and different kinds of More and different kinds of
businesses were created.businesses were created. Consumers needed things Consumers needed things
businesses couldnbusinesses couldn’’t provide.t provide.
Why GovernmentWhy Government’’s Role Changeds Role Changed
• IndustrializationIndustrialization More factories were built.More factories were built. Factories werenFactories weren’’t always fair t always fair
to workers or competitors. to workers or competitors.
Why GovernmentWhy Government’’s Role Changeds Role Changed
• Attitude changesAttitude changes
• Environmental concernsEnvironmental concerns Stopping pollutionStopping pollution Conserving resourcesConserving resources
Why GovernmentWhy Government’’s Role Changeds Role Changed
• Government in businessGovernment in business Government produces goods Government produces goods
and services for consumers.and services for consumers. Example = U.S. Postal ServiceExample = U.S. Postal Service
• Changes in technologyChanges in technology
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To provide public goodsTo provide public goodsPublic goods = goods and Public goods = goods and
services that we all useservices that we all useCannot be withheld from Cannot be withheld from
people who donpeople who don’’t help pay t help pay for themfor them
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To improve public welfareTo improve public welfare For the benefit of people For the benefit of people
who are unable to provide who are unable to provide for themselvesfor themselves
Examples:Examples: Food stampsFood stamps Unemployment Unemployment
compensationcompensation
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To protect public healthTo protect public health Examples:Examples:
Food, drugs, and Food, drugs, and cosmetics must be cosmetics must be tested.tested.
Water supplies must be Water supplies must be treated.treated.
Restaurants must Restaurants must undergo inspections.undergo inspections.
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To stabilize the economyTo stabilize the economy Through monetary policy:Through monetary policy:
The amount of money that The amount of money that will be in circulationwill be in circulation
The level of interest ratesThe level of interest rates Through fiscal policy:Through fiscal policy:
The level of government The level of government spendingspending
The level of taxationThe level of taxation
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To protect specific businessesTo protect specific businesses Price supportsPrice supports SubsidiesSubsidies
• To conserve the environmentTo conserve the environment
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To protect consumers and To protect consumers and investorsinvestors Examples:Examples:
Laws prohibiting false Laws prohibiting false advertisingadvertising
Laws setting building Laws setting building safety standardssafety standards
Laws regulating Laws regulating accounting and accounting and bookkeepingbookkeeping
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To protect competitionTo protect competition By banning monopoliesBy banning monopolies By regulating natural By regulating natural
monopoliesmonopolies
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To regulate workplace To regulate workplace conditionsconditions Examples:Examples:
Minimizing hazards to Minimizing hazards to workersworkers
Setting minimum wagesSetting minimum wages
Purposes ofPurposes ofGovernment InvolvementGovernment Involvement
• To protect business propertyTo protect business property Examples:Examples:
Zoning lawsZoning laws Copyrights, trademarks, Copyrights, trademarks,
patentspatents
©©TMTM
Explain ways in which government Explain ways in which government regulates business.regulates business.
ObjectiveObjective
How Government Regulates BusinessHow Government Regulates Business
• Regulatory lawsRegulatory laws Some prohibit activities.Some prohibit activities. Some control activities.Some control activities. Some set requirements.Some set requirements.
False advertisingFalse advertising
HarmfulHarmfulproductsproducts
How Government Regulates BusinessHow Government Regulates Business
• LicensingLicensing Issuing a permit for a person Issuing a permit for a person
or business to function in or business to function in the marketplacethe marketplace
Example = real estate agentExample = real estate agent Government can deny or Government can deny or
cancel a license if cancel a license if necessary.necessary.
How Government Regulates BusinessHow Government Regulates Business
• Wage/Price controlsWage/Price controls
On August 15, 1971, President On August 15, 1971, President Nixon imposed wage and price Nixon imposed wage and price controls to slow down inflation.controls to slow down inflation.
Government sets ceilings on Government sets ceilings on wages and prices.wages and prices.
Used only in times of Used only in times of national crisisnational crisis
Effects of RegulationEffects of Regulation
• Positive:Positive: Businesses are Businesses are
protected.protected. Businesses have fair Businesses have fair
access to resources.access to resources. Businesses have clear Businesses have clear
rules to follow.rules to follow.
Effects of RegulationEffects of Regulation
• Negative:Negative: ExpenseExpense InefficiencyInefficiency
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