Chapter 11Section 2: How Does the Government Protect Property Rights?The Constitutional Basis for Government Involvement in the Economy●to lay and collect taxes.●to provide for the general welfare.●to borrow money.●to regulate interstate and foreign commerce.●to establish uniform bankruptcy laws.●to coin money and regulate its value.●to fix the standard of weights and measures.●to protect the writings and discoveries of authors and inventors.Government’s Role in Protecting Property Rights●Private ownership encourages people to take care of their property.●Private ownership encourages people to make the most productive use of their property.●Private ownership encourages people to develop their property in ways that benefit others.An Exception to Property Rights: Eminent Domain●Eminent domain is the power to force the transfer of property from a private owner to the government for a public purpose. Section 2 ●Regulation:The establishment, by the government, of rules aimed at influencingthe behavior of firms and individuals; regulation can involve setting prices, establishing product and workplace standards, and limiting entry into an industry.●Eminent Domain: The power of a government to take an individual’s property forpublic use if the owner is fairly compensated.●Takings Clause:A clause of the Fifth Amendment to the Constitution stating thatthe government must pay private owners when their property is taken for public use under the power of eminent domain.Section 3: What Regulatory Roles Does Government Play in Our Economy?Government’s Role in Maintaining Competition:●Competition is vital to the economy, the government acts to maintain competition when markets fail to do so.●The illegal practice of price fixing occurs when competitors agree on a price for agood or service.●Acquire goods and services by seeking bids from competing firms●The tactic known as market division occurs when competitors agree to divide a market among themselves. ●The Justice Department and the FTC also monitor mergers, in which two separately owned firms combine into one firm. A merger is illegal if it will substantially lessen competition or tend to create a monopoly.
Government’s Role in Protecting Consumers, Savers, and Investors●in today’s market, buyers may not have all the information they need to make sound judgments about products. ●thave come to rely on regulatory agencies to provide such information. ●In 1972, Congress created the Consumer Product Safety Commission to protect Americans against undue risks associated with consumer products.
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