ECON 318 Lecture Notes - Lecture 21: Government Budget Balance, Fiscal Policy, Tax Rate
12 Nov 2016
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Econ 318: canadian economic policy & institutions 2016-2017. A basic characteristic of governments is their monopoly of violence that is perpetrated through military and police action. Once this monopoly is secure and functions with restrictions against its arbitrary use, citizens can safely carry on their ordinary economic and social activities. As adam smith put it a long time ago: the first duty of the sovereign [is] that of protecting the society from the violence and invasion of other independent societies . The second duty of the sovereign [is] that of protecting, as far as possible, every member of society from the injustice of oppression of every other member of it. Thus, governments must first: ensure law and order, establish well-defined and enforced property rights. Governments are important actors in the economies of all countries (about 40% of cdn gdp) Governments influence the functioning of the macro-economy through its setting of the rules and regulations for the market participants.
