The Government's Role in our Society
By 81983, Updated
Economics story board project
Economics Story Board: The Government's Role in our Society
Externality: costs or benefits that affect someone other than the producer or consumer of a good or service
The Government intervenes to prevent negative externalities and promote activities that cause positive externalities.
Air pollution is a negative externality and without government intervention it can cause great, even if unintended, harm.
Immunizations are positive externalities because they prevent people from getting harmful diseases. State governments encourage this by requiring children to receive them before enrolling in school.
tragedy of the commons: a circumstance in which a shared resource is overused or destroyed because users take no responsibility for its preservation
The Earth and the atmosphere are things that everyone uses and abuses. There is no way to really set laws to protect the entire atmosphere and we continue to overuse it and are hurting it in the process.
The government promotes economic stability by creating a widely accepted currency, and by stimulating business activity during economic slowdowns.
Examples of this are tax incentives and tax rebates which encourage businesses to invest in new capital equipment and consumers to spend more money.
In the United States we have many programs that succeed in carrying out this task including welfare, earned income tax credit, and unemployment insurance.
income redistribution: a policy designed to reduce income inequality by taking money from the rich and distributing it to the poor
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