Government in the U.S. Economy

Vocabulary flashcards covering the role of government in the United States modified free enterprise economy, its place in the circular flow model, and key metrics regarding government employment and consumption.

Modified free enterprise economy

A free enterprise economic system with some government involvement, including government protections, provisions, and regulations to adjust the free enterprise system.

Government in the Circular Flow Model

The circular economic model showing the government positioned in the center, interacting with households and businesses by exacting costs through taxes, providing goods and services, and functioning as both a consumer and a producer in the product and factor markets.

Households

One of the two main economic decision-makers in the circular flow model; the individuals who are the owners of economic resources (land, labor, capital, and entrepreneurship).

Businesses

One of the two main economic decision-makers in the circular flow model; the maker of products that purchases productive resources and supplies goods and services.

Product market

The market in the circular flow model where goods and services are exchanged between businesses, households, and the government.

Factor market

The market in the circular flow model where economic resources (land, labor, capital, and entrepreneurship) are bought and sold.

Outer green arrows (circular flow model)

The arrows in the circular flow diagram that represent the movement of money throughout the economy, including consumer spending, revenue, payments, and income.

Inner blue arrows (circular flow model)

The arrows in the circular flow diagram that illustrate the physical flow of economic resources and finished products among households, businesses, and government.

Government as a consumer

The economic role in which the government spends money in the resource market to purchase factors of production and in the product market to acquire goods and services.

Government as a producer

The economic role in which the government provides goods and services directly to both households and business firms.

Taxes (in the circular flow)

Money collected by the government from households and businesses as payment for provided goods and services, used to cover production costs and purchase items in the markets.

Government payroll employment

The total number of personnel employed across local, state, and federal levels of government, totaling almost $22\text{ million}$ workers, or about $16\text{ percent}$ of the total U.S. labor force.

Government consumption

The total amount of money spent by all levels of government—local, state, and federal—on goods and services, amounting to approximately $2\text{ trillion dollars}$.