Case study in word

INTRODUCTIONON:

In order to ensure and support economic freedom as well as political freedom, early economists envisioned a limited role for the government in economic affairs. In a market economy such as the one established in economically stable countries, most economic decisions are made by individual buyers and sellers, not by the government. Still, the government's role in the economy is not trivial. It includes, most economists believe, responsibility for six major functions.

The government:

1. Provides the legal and social framework within which the economy operates.

2. Maintains competition in the marketplace.

3. Provides public goods and services.

4. Redistributes income.

5. Corrects for externalities.

6. Takes certain actions to stabilize the economy.

Citizens, interest groups, and political leaders disagree about the proper scope of government activities within each of these functions. Over time, as society and the economy have changed, government activities in each area have generally expanded. Moreover, around the world, other societies with market economies have generally favored a larger economic role for government, sometimes endorsing actions beyond the six functions addressed in this lesson.

PART 1:

a. Explain each of the six economic functions of government and provide at least one example for each function.

b. Briefly describe what would happen if government did not perform this function.

c. Explain the AD/AS model. How does it affect government policy choices and how does it incorporates growth, unemployment & inflation.

d. How does government budgetary and monetary policy influence the overall levels of employment, output & prices?

PART 2:

1. There are many differing views so please give only 2 views on what role the government should play in the economy?

2. Governments impose lots of rules in the economy. However, a lot of things still go unregulated. Why not regulate in every problem area?

3. What would happen if the government decided (ie. made it law) that all new vehicles produced must only be one specific colour (ie. all must red). In terms of an overall economy, what might be problematic about this "all cars must be the same colour" scenario?

PART 3:

Read the below topics. Describe which economic function (or functions) are being referred to and why.

1. Local law enforcement significantly increase neighbourhood patrols.

2. New information from Revenue Canada emerges that will significantly help consumers choose more wisely.

3. Country funds free flu/virus vaccines.

4. World leaders announce that MORE spending will fight recession.

5. Movie script writer sues production company, says movie idea was stolen.

6. Competition Bureau blocks major merger of two airlines.