Government Regulation and Assistance

1. Government Regulation and Assistance Chapter 4-3

2. Regulatory Activities • Business activity in the US is structured as a free market. • Private organizations own the factors of production. • Government does get involved in some areas.

3. 1. Regulation of Utilities • A public utility is an organization that supplies a service or product vital to all people. • If there were multiple electric companies, each might have its own utility poles, lines and equipment. • Service would be more expensive and less efficient. • While many of the utility company are privately owned, the government closely regulates them. • Rates they can charge have to be approved by government agencies.

4. 2. Prevent Unfair Business Practices • Government attempts to promote fair competition. • The government passed the antitrust laws in order to promote competition and fairness and avoid monopolies. • A monopoly exists when a business has control of the market for a product or service. • Public utility monopoly may benefit consumers others may not be good for the economy.

5. 3. Government Assist Business • Collect and report valuable information • Provide government loans to new businesses • Provide financial help in times of hardship (farmers during drought)

6. 4. Buys Goods and Services • Total government purchases of goods and services make up about 20% of all goods and services produced in the US • Key economic force

7. 5.Employs Workers • Government is the single largest employer in the US economy. • About 1 in 9 workers is a public employee

8. 6.Raises money • Borrowing (selling bonds) • Taxes (income, sales, and real estate) • Other (fines, traffic violations, fees, and licenses)

9. Taxes • Income – Federal and State • Personal (largest) • Corporate • Real Estate (local) • Used to pay for schools • Sales (state and local)