economics lap 16 describe how government is involved in business. objective

EconomicsEconomicsLAP 16LAP 16

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

©© TMTM

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.


• 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.


• Attitude changesAttitude changes

• Environmental concernsEnvironmental concerns Stopping pollutionStopping pollution Conserving resourcesConserving resources


• 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


• 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


• 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.


• 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


• To protect specific businessesTo protect specific businesses Price supportsPrice supports SubsidiesSubsidies

• To conserve the environmentTo conserve the environment


• 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


• To protect competitionTo protect competition By banning monopoliesBy banning monopolies By regulating natural By regulating natural

monopoliesmonopolies


• To regulate workplace To regulate workplace conditionsconditions Examples:Examples:

Minimizing hazards to Minimizing hazards to workersworkers

Setting minimum wagesSetting minimum wages

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


• 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.


• 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

Costs of RegulationCosts of Regulation

• Government pays by:Government pays by: Collecting taxesCollecting taxes BorrowingBorrowing

From the private sectorFrom the private sector By issuing bondsBy issuing bonds

I want I want your tax your tax money!money!

economics lap 16 describe how government is involved in business. objective

Documents

business government

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technology slide

bookkeeping slide

environment slide

level of government

patents tm slide

level of taxation slide