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The text focus on the role of government in world economy

The text starts emphasizing that in every society governments provide such services as national defence, police etc.

Government expenditure chiefly financed by imposing taxes and by government borrowing.

Differences in scale of government activity relative to national income reflect differences in the way different countries allocate their resources among competing uses.

Governments directly affect what is produced by spending a part of revenue on goods. Also they affect for whom output is produced throught their tax and transfer payments. And finally government affects how goods are produced, for example throught the regulations it imposes. But some people believes that a large government sector makes the economy inefficient, reducing the number of goods that can be produced. In conclusion if large scale government activity leads to important disincentive effects, government activity will affect not only what, how and for whom goods are produced, but also how much is produced by the economy as a whole.

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