Chapter 24: Role of government

Question 1

Government as a producer

Answer 1

• Government may produce products that are of key importance, products produced by a natural monopoly, essential products, underproduced products
• Seek to insure key industries survive and do well
• May provide essential products such as housing, on ground of quity and merit and public goods

Question 2

Public sector contracts and partnerships between the public and private sector

Answer 2

• Private sector firms provide a range of products and services for the public sector
• Government forming partnerships with private sector firms
• Private sector firms provide finance for a state project
• Public and private sectors provide part of service

Question 3

Government as an employer

Answer 3

• Government employs workers and managers to operate its state owned enterprises
• To reduce employment
• To control rises in prices, government can limit wage rises of its own owkers and the price charged by its enterprises
• Can also set an example int erms of employment practice

Question 4

Government at an international level

Answer 4

• Promote free international trade
• Other governments place restrrictions on what can be purchased from and sold to other countries
• Governments also vary in their policies towards foreign multinational companies wanting to set up in their countries
• Some governments are members of trade blocs
• Governments belong to international organisations