Section 3.3 Government in a Market Economy

Pages 67-71

Mrs. Leonard

Getting Started

How do you personally benefit from the government’s role in our free enterprise system? (Hint: What does the government provide to you free of charge?)

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Government’s Effect on What is Produced

The government has an effect on what is produced in three important ways: Purchases _____________________ Subsidies

Purchases

The government purchases huge amounts of ______________ and ______________.

Example: The National Aeronautic and Space Agency (NASA) is the sole purchaser of various devices produced by _________________ companies

Example: private companies also supply the government with everything from pens to office-cleaning supplies

Taxes

Most states charge sales tax on _________ sales, and most charge extra taxes on certain items, such as cigarettes, gasoline, and alcoholic beverages.

These taxes reduce consumption of these products, reducing producers’ revenues. Click for a listing of cigarette taxes by state

Subsidies

The government provides ______________ (payments) to producers of certain kinds of goods.

Example: Agricultural products are commonly subsidized

Example: The government also pays subsidies to companies that locate their businesses in certain inner-city neighborhoods, known as ______________ Click here for additional information on

enterprise zones

CheckPoint

How are entrepreneurs affected by taxes and subsidies?

The Role of Government

Government plays four roles in our free enterprise system

1. General services

2. _________________ businesses

3. ____________________ industry

4. Acts as a competitor (in a few instances)

The Role of Government

The government involvement in our economy classifies the United States as a ___________ free enterprise system.

Provider of Public Good

A public good is a good from which _______________ receives benefits.

Because the country as a whole benefits from these kinds of goods and services, the government has a role to plan in providing them.

Provider of Services

Our government provides __________, police, fire protection, and a free _____________ education.

All of these services are in place to ensure the ____________ and general welfare of people.

Provider of Services

Government also provides _________________ for some people who have lost their jobs as a result of changes in the marketplace and/or foreign competition.

Example: Joint Training Partnership Act (JTPA)

Provider of Services

To improve transportation, our government supports the building of __________ and _____________.

Public libraries are paid for with government funds along with social _____________.

Example: Medicare and Medicaid

Supporter of Business

To support and encourage our free enterprise system, our government runs the ____________________________________________ (SBA)

The SBA provides _______________ and educational materials to prospective business owners to help ensure their success

Supporter of Business

The government is the single _______________ consumer of goods and services in the United States.

All government projects require purchases of goods and services produced by ____________________.

The products range from uniforms for military personnel to defense equipment.

Supporter of Business

To encourage global business activity, our government establishes ________

_____________ and agreements with other countries.

These agreements make it easier for U.S. companies to do business in other ______________.

Regulator

Making _________ is one of the main functions of our government.

Most laws are designed to protect the safety, ____________, and welfare of individuals.

Consumer and Worker Protection

At the state and local levels, government agencies require ______________ of people who perform certain services, such as hairstylists and manicurists.

Health departments inspect _____________ and food handling businesses.

State and federal governments mandate a ________________________.

Inspection

The U.S. Department of Agriculture (USDA) inspects _____________ and _____________ plants to ensure that appropriate hygienic measures are being observed.

Inspection

The U.S. Occupational Safety and Health administration (OSHA) inspects _________________ to ensure that conditions are safe for workers.

Licenses

______________ and _____________ must fulfill certain training requirements, and they must be licensed by the state in which they work.

Entrepreneurs entering fields requiring licenses must pass ___________________ and pay licensing ___________ before they can start their business.

Business Protection

The government also provides laws and regulations regarding patents, ________________, and trademarks.

These laws ____________ businesses for a period of time from having others copy their creative ideas.

It is becoming more common to find companies stealing ideas and patents from other companies.

CheckPoint

Give two examples of the government acting as a provider.

Give two ways the government acts as a regulator.

Competitor

There are three business operations that our government runs:

1. The Tennessee Valley Authority (TVA)

2. The ___________________________

3. Amtrak

Competitor

The TVA provides ________________ to parts of the rural south. It was established during the Great Depression.

The U.S. Postal Service provides _______________ nationwide. There are several companies that now compete with the Postal Service.

Example: United Parcel Service and Federal Express.

Competitor

Amtrak is a _____________________ that was established under the Rail Passenger Act of 1970.

The U.S. government also runs national parks and _______________.

3.3 Assessment Questions

1. What are some public goods that affect you?

2. What public goods would affect you as an entrepreneur? (think about your business)

Think About It…

List two things you learned from the 3.3 notes.

List one thing your neighbor learned from the 3.3 notes.