Macroeconomics
Prof. Kone
Presentation: Group 6
Rong Chen
Crystal Ratcliff
Ning Chen
Claudia Lujan
Kelvin Sime
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What does the Government Do?
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Governmental branches
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Economic Sectors
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How does the size of the public sector in
various countries compare?
What does the Government Do?
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Government takes place in every economy
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Responsible for economic policies
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Standardizes and shapes more policies than
policies that are made at local and state levels.
Solving Public Issues

Minimizes problems including working
out market imperfections, externalities,
and public good issues.

Decreases interferences due to
business cycles.

Proclaims the actions by firms or
consumers to be fraudulent or illegal.
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Citizens call on the government for
protection against the periods of dry
spells or lack of income within a
business.
Goods and Services

Police protection and the
national defense are
examples of public
services that are provided
by the Government.

Here, the consumption of a
good by one person will not
minimize the quantity or
quality available for others.

The issuance of the above
mentioned public goods
and services eliminates the
free rider problem that
would occur if private firms
provided the goods.
Spending and Control of Money
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Upheld by the Government.

Monitoring of Government
spending and money supply is
done to prevent budget deficits.

Fiscal and Monetary policies are
what make up the
macroeconomics standpoint.

These policies are attempts to
control business cycles.
Competition within the Economy

The Government promotes competition
and regulates industries in which free
market competition may not exist.

Monitors other industries to promote
competition.

Free market meaning the price of an
item is arranged by the mutual consent
of sellers and buyers, with the supply
and demand of that item not being
regulated by a government.
Institutions
Commerce Department
Federal Reserve
Treasury Department
Congress / Presidential Role


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Regulate / Provide public and private policies.
Provides leadership in formulating fiscal policy
Congress
Sets government spending and taxes
 Passes laws related to economic conduct.

Treasury Department
Office of Management
And budget
Justice Department
International Trade
Commission
Central
Leadership
Commerce
Department
Federal Trade
Commission
Federal
Reserve
Council of Economic
Advisers
Roles

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Controls money supply and credit condition
Monitors the economy and advices the president
Administers federal policy regulating industries
Enforces legal setting of business
Oversees national banks
Economic Sectors

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The government plays a role in
every economy, but in some
countries, the public sector plays a
larger role in the economy than in
the United States.
There are two different kinds of
economic system; one is called
centrally planned economy and the
other is called Market economy.
The size and influence of the public
sector ranges from the market
economies of the United States to
the centrally Planed economy of
Cuba.
Con’t

In the United States, we have the Market
economic system, in this system, the public
sector plays a small role in the economy
and it relies on individual actions to solve
economic problems.

By contrast, we have Cuba, which
implements the Centrally Planned
economic system in which the state or
government controls the factors of
production and makes all decisions about
their use and about the distribution of
income.
Comparison of Public Sector Sizes in
Various Countries

Market Economy

United States


Less than 25% of the U.S
Outputs goes towards
Government Expenditures.
Centrally Planned
Economy

Cuba

About 75% of Cuba’s
Output goes towards
Government Expenditures
The Size of the U.S. Public Sector

Why is the U.S. considered a market economy?
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People can own business
People can be private land owners
People are entitled to purchase what they want
U.S. rely on the decisions of individuals
United States has relatively small public sectors.
The Size of Cuba’s Public
Sector

Why is Cuba considered a
Centrally Planned economy?

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People are NOT free to start a
business
Can only buy what the government
has available for them to buy.
They work as employees of the state
Rely on Government to answer
economic question for all individuals
Public Sector is the principal
component of the economy.
The Size of Germany’s Public
Sector

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Although Germany may have a
market economy it’s Public
Sector plays a more significant
role compared to the U.S.
Germany’s Government fosters
social programs

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Regulates business hours
Ports minimum prices
Imposes rent control
Regulates hiring and firing of
employees
The End