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

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

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