Social Studies - 2018-19
GOVT.15b - Government's Establishment and Maintenance of Rules and Institutions
The student will apply social science skills to understand the role of government in the Virginia and United States economies by
b) describing government’s establishment and maintenance of the rules and institutions in which markets operate, including the establishment
and enforcement of property rights, contracts, consumer rights, labor-management relations, environmental protection, and competition in
UNDERSTANDING THE STANDARD
Political opinions differ about the role of government in a market economy.
Protecting the environment is a public service.
Property rights of an individual are relative and limited.
Contracts are legally binding.
The United States government creates
laws and agencies to regulate
production and exchange activities,
conduct research, and establish
guidelines for consumer rights and
An important role for the government in the economy is to define, establish, and enforce property rights.
In a free market economy, markets need a backdrop of a rule of law, in which the government enforces contracts and protects property rights, to function well.
Individuals enter into agreements (contracts) with one another to buy and sell goods and services. Whether written or oral, these agreements are legally binding and can be enforced within the judicial system established by government.
The government can intervene in labor-management relations and can regulate competition in the marketplace.
To protect the environment, the government sets regulations and levies fees to ensure that the producer pays all costs resulting from polluting. The government can also subsidize pollution reduction efforts.
Examples of government agencies created to protect
Consumers (e.g., Consumer Product Safety Commission regulates the safety of many products not covered by other agencies; the Food and Drug Administration regulates the safety of food, drugs, and cosmetics)
Labor (e.g., Occupational Safety and Health Administration)
The environment (e.g., Environmental Protection Agency)