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    The Economic Basis For Government Activity

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    dendenlibero
    Government provides essential services like security, infrastructure, and education that benefit society but require collective funding through taxes. Without government, society would be disorganized with no public services. Citizens receive benefits from government but differ in their views of government roles due to varying tax costs and valuations of services. Public finance studies how government funds activities through taxes and alternatives. Political institutions determine government functions and financing through democratic processes like majority rule. Government allocates resources to its services by "crowding out" private production, illustrated by production possibility curves showing tradeoffs between public and private goods.

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    The Economic Basis For Government Activity

    Uploaded by

    dendenlibero
    1K views24 pages
    Government provides essential services like security, infrastructure, and education that benefit society but require collective funding through taxes. Without government, society would be disorganized with no public services. Citizens receive benefits from government but differ in their views of government roles due to varying tax costs and valuations of services. Public finance studies how government funds activities through taxes and alternatives. Political institutions determine government functions and financing through democratic processes like majority rule. Government allocates resources to its services by "crowding out" private production, illustrated by production possibility curves showing tradeoffs between public and private goods.

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    FinM 50

    Original Title

    The Economic Basis for Government Activity

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    Government provides essential services like security, infrastructure, and education that benefit society but require collective funding through taxes. Without government, society would be disorganized with no public services. Citizens receive benefits from government but differ in their views of government roles due to varying tax costs and valuations of services. Public finance studies how government funds activities through taxes and alternatives. Political institutions determine government functions and financing through democratic processes like majority rule. Government allocates resources to its services by "crowding out" private production, illustrated by production possibility curves showing tradeoffs between public and private goods.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    1K views24 pages

    The Economic Basis For Government Activity

    Uploaded by

    dendenlibero
    Government provides essential services like security, infrastructure, and education that benefit society but require collective funding through taxes. Without government, society would be disorganized with no public services. Citizens receive benefits from government but differ in their views of government roles due to varying tax costs and valuations of services. Public finance studies how government funds activities through taxes and alternatives. Political institutions determine government functions and financing through democratic processes like majority rule. Government allocates resources to its services by "crowding out" private production, illustrated by production possibility curves showing tradeoffs between public and private goods.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 24

    THE ECONOMIC BASIS

    FOR GOVERNMENT
    ACTIVITY
    INDIVIDUALS & GOVERNMENT
    (PUBLIC FINANCE)

    INDIVIDUALS, SOCIETY &


    GOVERNMENT
    What would it be like to live in a nation
    without government?

    - disorganized society
    - No police / fire protection
    - Poor roads (economy is compromised)
    - No publicly funded schools
    - No health care and medicare

    Benefits We Get from


    Government Activities

    We all benefit from government activities


    and expenditures
    Citizens benefit from the many goods and
    services made available by governments,
    but they also pay the costs of these services
    We differ in our views about what
    governments should and should not do
    because our valuations of the benefits we
    get from government differ and because of
    variation in the amount of taxes and other
    costs each of us pay.

    PUBLIC FINANCE
    Is the field of economics that
    studies government activities
    and the alternative means of
    financing these government
    activities.

    GOVERNMENTS
    Are organizations formed to
    exercise authority over the
    actions of people who live
    together in a society and to
    provide and finance essential
    services

    POLITICAL INSTITUTIONS
    Constitute the rules and generally
    accepted procedures that evolve in
    a community for determining what
    government does and how
    government outlays are financed
    Such democratic institutions as
    majority rule and representative
    government - offer citizens an
    opportunity to express their desires

    HOW GOVERNMENT ALLOCATE


    RESOURCES BETWEEN GOVERNMENT &
    PRIVATE USE

    The real cost of government goods and


    services is the value of private goods
    and services that must be sacrificed
    when resources are transferred to
    government use.
    Private Goods & Services are those
    items, such as food and clothing that are
    usually made available for sale in
    markets.
    Government Goods & Services

    PRODUCTION-POSSIBILITY
    CURVE
    Illustrates the trade-off between
    government and private goods and services
    This curve gives the alternative
    combinations of government goods and
    services and private goods and services
    that can be produced in an economy given
    its productive resources and technology and
    assuming that resources are fully employed.

    HOW GOVERNMENT GOODS AND


    SERVICES ARE DISTRIBUTED
    Non-Market Rationing the methods
    used by government to distribute
    government goods and services.
    This means that government goods and
    services are not made available to persons
    according to their willingness to pay and
    their use is not rationed by prices.
    In some cases, the services are available to
    all, with no direct charge and no eligibility
    requirements, while others have.

    The Mixed Economy


    A Mixed Economy is one in which
    government supplies a considerable
    amount of goods and services and
    regulates private economic activities
    Government use taxes and subsidies to
    affect incentives to use resources
    Provisions of a significant amount of
    goods and services takes place through
    political institutions which often compel

    Pure Market Economy


    Virtually all goods and services would be
    supplied by private firms for profit and
    all exchanges of goods and services
    would take place through markets
    Prices are determined by free interplay
    of supply and demand
    Buyers are not compelled to purchase
    something they do not want.

    CIRCULAR FLOW IN THE MIXED


    ECONOMY

    GOVERNMENT EXPENDITURES
    BASIC CATEGORIES
    I. Government Purchases are those that
    require productive resources (land, labor and
    capital) to be diverted from private use by
    individuals or corporations so that such
    resources can be used by government. Example:
    supply for national defense, garbage disposal
    II. Government Transfer Payments constitute
    a source of income support to recipients who are
    not required to provide any service in return for
    income received. Example: SSS pensions

    THE GROWTH OF
    GOVERNMENT EXPENDITURES

    Group Activity
    1. Use a production-possibility curve to show
    the cost of increasing government provision of
    medical services.
    2. As productive resources and technological
    know-how increase, a nations productionpossibility curve shifts outward. Use a
    production-possibility curve to show how
    resource growth and improvements in
    technology can allow a nation to increase its
    production of government goods and services

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