Roles Of The Government Essay

The government is a country’s most influential body when it comes to economic function. In a way, the government is a country’s economic guardian. This is because it is the government’s responsibility to ensure sure that, in a rapidly changing world, changes are made on a higher level to ensure that the economy adapts to upcoming and present issues, and is as prosperous as possible. But exactly what measures does the government employ in order to fulfil this responsibility? This essay will answer that question by discussion the various roles of the government and the various types of fiscal policy. Following the Great Depression and the outcome of the Second World War, capitalist governments around the world began to adopt to the ideas of …show more content…
For example, without a legal system, people are able to overexploit common pool goods. This can lead to various disadvantages to the environment and to other people who are unable to exploit as efficiently as the one who is overexploiting. By implementing legal systems, such as a police force and law, the government is able to ensure that situations like this do not occur. Another important reason for legal systems is because, without regulations, corporations would not necessarily treat their consumers with integrity. In order to ensure that all goods distributed to the general population are safe and fair, the government must make regulations that prohibit things like scamming and the distribution of faulty products. The second role of the government is promoting competition. In the eyes of societies centered around capitalistic values, competition seems to be the most important and effective economic regulator. Because of competition, corporations are driven to be innovative and to price things reasonably. Therefore, the government enforces regulations which ensure that competition is present …show more content…
A government has a political role because it holds the power to make important decisions for a country based on what the majority of its population believe is correct or desirable. This idea of decisions based on favour leads into what defines a merit and a demerit good; wherein a merited good is essentially a good that is accepted by a country’s society and a demerited good is a good that is not accepted by a country’s society. In the case of merit goods, they are generally viewed as useful and important to the country’s citizens, and are therefore subsidized in order to make them more easily accessible. Examples include health care, museums, and education. On the other hand, demerit goods are viewed by the general population as negative, and therefore the government taxes this good in order to make it less desirable. Examples include tobacco and alcohol. In some cases, when the good has an especially negative image, it can be outright banned, such as with prostitution and marijuana. Another political role of the government is to distribute income. To distribute income, the government uses either progressive income tax or transfer payments. A progressive income tax is a tax that is increased based on the income of the person being taxed, where the higher the income, the higher the tax. For a similar purpose, the government also