Why is the government a consumer?

Answer 1

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Government as an Economic Player

So far, you've seen that most economic decisions are made by individual consumers as well as businesses. Although we have a free-market system in the United States, the government still has an important role in the economy. It tries to guide the overall pace of the economy, help maintain steady growth, keep prices stable, and provide public goods and services. Examples of government institutions include state universities and public hospitals. An example of government action came in 2006, when the U.S. government helped stabilize the price of oil by ensuring that oil companies could not raise the price of gasoline above a certain limit. This enabled consumers to continue to afford and use gasoline.

This decision also affected the government - it also needs oil products to run its operations and offices. The government plays the role of consumer even while it's attempting to guide and benefit the economy.

Send My Bill to the GovernmentIn other countries, the government always plays an important role. In Canada, the government provides universal healthcare to all its citizens using taxes paid by workers and businesses. In this case, the government plays the role of producer.