Monday, April 23, 2012

Economic Role of Government

The major activities of government that affect economic activity are:
1. taxes
2. expenditures
3. regulations
Economists accept that in mixed economies government has the following functions
1. Establishing the legal framework for the market economy.
2. Determining macroeconomic stabilization policy
3. Affecting the allocation of resources to improve economic efficiency
4. Establishing programs that affect the distribution of income


Paul Samuelson and William D. Nordhaus, Economics, 13th Edition,  McGraw-Hill, 1989

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