Government Role in the Economy

Government's Importance: Government influences economic activity and regulates market competition.

Roles:
- Promotes competition in the marketplace.
- Provides goods and services that are inefficiently managed by the private sector.
- Collects taxes and allocates budget across levels of government (local, state, federal).
- Regulates various aspects to protect rights and ensure fair trade.

Competition Promotion:
- Antitrust legislation prevents monopolies and promotes competition (e.g., Sherman Antitrust Act).
- Encouragement of global trade through treaties (e.g., NAFTA, TPP).
- Support for start-ups via the Small Business Administration (SBA).
Regulation of Competition:
- Agencies like FCC, SEC, and FTC regulate business practices to ensure fairness and protect consumers.
Provision of Goods & Services:
- Government provides essential services like highways, schools, and national defense that markets can't efficiently provide.
Financing Government Services:
- Funded through taxes, borrowed funds, fees, and fines.
- Tax types include:
- Income tax: Based on individual and corporate earnings.
- Sales tax: Percentage of purchase price paid by consumers.
- Property tax: Levied on land and buildings.
Federal Reserve System:
- Central bank of the U.S. manages the money supply and regulates banks to ensure financial stability.
- Influences interest rates to control inflation.
Consumer Protection:
- Agencies like CPSC, FDA, OSHA, and EPA enforce regulations to protect consumers, labor rights, and the environment.
Currency and Money's Role:
- Money facilitates trade, acts as a store of value, and serves as a measure of value.
- Types of money: coins, currency, and bank deposits.