4.1 - The Role of Government Flashcards
Mixed economy
A blend of the free market and planned economy as individuals, firms and the government own factors of production and distribute goods/services
Planned/command economy
One in which all of the resources are owned by the state and the government controls the distribution of goods/service
Free market economy
Has no government intervention in the allocation of resources and distribution of goods/services
Types of government intervention (3)
- Local
- National (macroeconomic)
- International
Local intervention
Responsible for delivering government services on a town/regional basis
Characteristics of local intervention
- Usually recieve funding from the central government
- Are held accountable by the voters for the quality of goods/services provided
Branches of local governments
- councils
- federal
- state
Examples of local intervention (name 3)
- local health services
- rubbish collection
- parking fines
- local prosections
- parks and recreation
- public services
National intervention
Responsible for determining the best combination of policies that will help them to meet all of their macroeconomic aims (domestoc decisions)
Examples of national intervention (name 3)
- Central government
- Fiscal policy
- Monetary policy
- Supply-side policy
International intervention
Intervening with the macroeconomic decisions of other nations to benefit their own
* to both protect domestic industry & to help it compete internationally
Examples of international intervention (2)
- Exchange rate interventions
- Trade
- Protectionism
