The role of the state

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1. What does it mean by the state as an economic regulator?

  • The government decides what happens with taxes and how much everyone should pay.
  • They are responsible for economic wellbeing. They control the level of economic activity and raise revenue via taxation to meet the needs of the country.
  • It identifies problems with income and expenditure and fixes them.
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2. Define accountability.

  • The action of controlling cash flow and business accounts.
  • The obligation of a business or individual to account for its activities, accept responsibility for them and to disclose the results in a transparent manner.
  • Being able to make someone else accountable for your own mess.

3. What are private costs and benefits?

  • These apply to the business and it's owners and are internal. These can include labour and production costs.
  • These only occur to the owner and affect no other stakeholder.
  • Costs and benefits which external stakeholders have no legal obligation to know about.

4. What does it mean by the state as a supplier?

  • The government supplies goods and services for the public such as health care and the armed services.
  • They too want the highest possible price for their output.
  • When prices increase, they supply more.

5. What does it mean by the state as a consumer?

  • They consume goods. For example, they use lots of paper and if they want to improve the roads, they will employ a company to do so.
  • They want to get goods for the lowest price possible to maximise their utility.
  • The government consume money through taxation.
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