The Role of Governments
1 Governments determine the legal framework that sets the basic meets for the ownership of property and the operation of markets. In addition, governments at all levels regulate economic behavior, setting detailed rules for the operation of businesses. Such regulations apply to all businesses; examples include laws against fraud and racial discrimination.
2 Governments buy and produce many goods and services, such as defense, education, parks and roads, which they provide for firms and households. They typically buy computers but write programs they need to operate them. Governments also produce and sell goods. In many countries the phone company is government-owned, like the electric system.
3 Governments also make transfer payments, such as Social Security and unemployment benefits to individuals. Transfer payments are payments for which no current economic goods or service is provided in return and therefore do not represent expenditure for the purchase of final products. A firefighter’s salary is not a transfer payment, but welfare benefits are.
4 Governments pay for the goods they buy and for the transfer payments they make mostly by collecting taxes, including personal income taxes, property taxes, social insurance taxes, and sales taxes. Over 60% of the government revenue in the U.S. is collected by the federal government. This does not include taxes collected by state and city government.
5 Every market economy suffers from business cycles. Governments, through their control of taxes and government spending and through their ability to control the quantity of money, often attempt to modify fluctuations in the business cycle. For instance, the government may reduce taxes in a recession in the hope that people will increase spending and thus raise the GNP.
23.Paragraph. 2 _________.
24.Paragraph 3 _________.
25.Paragraph 4 _________.
26.Paragraph 5 _________.
B.Making Transfer Payments
C.Making Laws and Regulations
D.Buying and Selling Goods and Services
E.Stabilizing the Economy
F.Controlling the Market
27.Governments regulate economic behavior, and the regulations _________.
28.Besides buying and producing services, governments also _________.
29.The government revenue in the U.S. is collected by the federal government and _________.
30.The government may reduce taxes in a recession in order to _________.
A.apply to all businesses.
B.raise the GDP.
C.state and city government
E.modify fluctuations in the business cycle
F.produce and sell goods.