07b_PublSectShow

07b_PublSectShow - Public Sector Government and the Economy...

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Public Sector Government and the Economy Establish the Legal Structure (and enforcement) Facilitate the market process (e.g., contract law) Key : protect private property Government regulation [Ch. 13-14] [Major source of debate: conservative-liberal] Support of Private Sector (tax policy, subsidies, infrastructure) Public Goods and Services Income Security / Redistribution [Ch. 18] Macro Stabilization Policy : Fiscal and Monetary
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Public Goods Exclusion Principle Free-rider problem people can receive benefits from a good without paying for it. Public goods goods whose benefits cannot be denied to public. [exclusion principle does not apply.] Examples?
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Physical capital: required for economic activity. Public goods funded by government. (Examples?) Some infrastructure is private. (Examples: freight rail transport; utilities.) Issue : amount of public goods – (roads, health care, defense) This varies dramatically among economies. Normative
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This note was uploaded on 07/14/2010 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

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07b_PublSectShow - Public Sector Government and the Economy...

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