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The importance of the role of government in the market economy 4

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The importance of the role of government in the market economy 4

  1. 1. A discussion of importance of the role of Government in the market economy by: MUTUMBULWA J.A.S BACHELOR OF BUSINESS ADMINISTRATION
  2. 2. OUTLINE • DEFINE MARKET ECONOMY • PROVIDE A LEGAL SYSTEM • PUBLIC GOODS AND SERVICES • REDISTRIBUTION OF INCOME • MAINTAIN COMPETITION • CONCLUSION • LIST OF SOURCES • QUESTIONS
  3. 3. MARKET ECONOMY • According to Parkin (2012), Individuals own all factors of production, and make own decisions. • Decision making-process is, thus, said to be decentralized.
  4. 4. Provide a legal system • ENCOURAGES INDIVIDUALS TO: • Take care of their properties • Invest in their properties.
  5. 5. Enforcing law and order • Illegalise production and consumption of illegal goods and services
  6. 6. Public goods and Services • Those that private firms cannot provide. • Provide for free or at lower affordable costs. • Government can pay a private firm to produce public goods.
  7. 7. Redistribution of income Market economies face income inequality • Tax collections • Main source of government revenue
  8. 8. Maintain competition • Regulating monopiolies • Prevent monopolistic firms from setting higher prices • Promote competition
  9. 9. CONCLUSION • Limited, but very important role to play • Promote equity • Prevent market failure • Stabilize the economy.
  10. 10. List of Sources • Abedian, I. & Standish, B. (1992). Economic growth South Africa. Cape Town: Oxford University press. • Parkin, M. (2012). Economics: Global and Southern African Perspectives. Cape Town: Pearson Education (pty) Ltd. • Barro, J. (2008) . Macroeconomics: A modern Aproach: Macmillan Inc.
  11. 11. QUESTION?

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