What is the role of the Government in Economics?
The Government has a limited but important role in the market economy. It has four major roles in the economy:
- Providing the Legal Structure. The Government sets up the system and procedures that the public should follow.
- Government is in charge to provide the legal status of a business.
- The registry of the articles of a corporation is also legalized by the government.
- Protecting property rights.
- Legalization of contracts
- The Government provides a medium of exchange
- The Government guarantees product quality.
- Maintaining Competition. Competition is essential to innovation and choice. The Government steps in to correct monopolism.
- Redistributing Income.
- Transfer Payments
- Market Intervention
- Reallocating Resources.