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Week 7: The Public Sector/Macro and Micro Integration

Introduction The Public Sector Micro and Macro Economics Integration

Introduction

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Government involvement in the economy can be justified by any of three reasons:

1. achieving efficiency in the use of resources,

2. achieving equity in the distribution of those resources, and

3. achieving stabilization in the behavior of the economy over time.

That governments at all levels (federal, state, and local) are big actors in the overall economy cannot be denied when one realizes that the federal government alone is now spending more than two trillion dollars per year on its programs. Two trillion dollars. That is a 2 followed by 12 zeros!

The Public Sector

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Given finite economic resources at any given...