O LevelEconomicsCambridge (CIE)Revision Notes4. Government & the Macroeconomy4.1 The Role of GovernmentLocal, National & International

Local, National & International (Cambridge (CIE) O Level Economics)

Revision Note

Steve Vorster

Expertise

Economics & Business Subject Lead

Government Roles in a Mixed Economy

  • Nearly every economy in the world is a mixed economy & has varying degrees of government intervention 

  • Governments intervention is necessary for several reasons & occurs on three distinct levels

    • Local intervention

    • National (macroeconomic) intervention

    • International intervention

The Role of Government in a Mixed Economy

Area of Intervention

Examples of Intervention

Explanation

Local

  • Local health services

  • Refuse collection

  • Parking fines

  • Local prosecutions

  • Parks & recreation

  • Public services

  • Local governments are responsible for delivering government services on a town/regional basis

  • They usually receive funding from the central government & are held accountable for the quality of goods/services provided by the voters in their area

  • Local government branches are often referred to as 'councils', 'federal' or 'state' 

National

  • Central Government

  • Fiscal Policy

  • Monetary Policy

  • Supply-side Policy

  • Determining the best combination of policies that will help them to meet all of their macroeconomic aims

International

  • Exchange rate interventions

  • Protectionism

  • International trade is vital to economic growth in many economies

  • Governments have a role to both protect domestic industry & to help it compete internationally

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    Steve Vorster

    Author: Steve Vorster

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.