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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(支出)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 governments.

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(波动) in the business cycle. For instance, the government may reduce taxes in a recession(萧条)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

A Collecting Taxes

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 business

B raise the GNP

C state and city government

D reduce spending

E modify flutuations in the business cycle

F produce and sell goods

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