3 The Role of Government Households in Economic Activity – Do you know what economic activity is? Actually economic activity exists at all levels in society. Economic activity is any activity that involves money and the exchange of products or services.
All actions related to the production, consumption and distribution of goods or services at all levels in society can be said to be economic activities. Economic activity can also be interpreted as a series of activities that produce, sell, trade, distribute goods or services involving monetary transactions.
Grouping businesses that provide products or services to institutions or end consumers is an economic activity. If interpreted simply, economic activity is an activity to get money, wealth, and income.
The interaction between economic actors will lead to economic activity. There are important elements in building an economic activity.
Economic actors are one of the elements that must exist in economic activity. It can be said that economic actors are parties in an economic system that carry out economic activities.
Individual subjects as well as organizations or governments are economic actors who carry out economic activities in the form of production, consumption and distribution. Economic actors can also be interpreted as a person or organization that has influence on economic motives, namely by producing, buying, or selling.
4 Types of Economic Actors in Indonesia
In Indonesia itself there are four types of economic actors which are divided into consumer households, producer households, government households, and foreign communities. The four types of economic actors have different roles.
In simple terms, examples of the activities of economic actors are housewives who buy various foodstuffs, such as rice, eggs, meat, vegetables, and so on. This article will bring you to know the role of government households in economic activity.
However, beforehand, let’s add to our knowledge by tracing the role of economic actors in economic activity. The first type of economic actor is the consumer household or what is often abbreviated as RTK.
A group of people or entities that carry out consumption activities is called a consumer household. As a consumer household, the role played is to consume the use value of an item or service provided by the producer. Then the other role is to provide various factors of production.
What are the factors of production in question? The factors of production are labor or human resources, capital, and land or land funds. Consumer households that provide factors of production will later receive remuneration from producer households.
Remuneration for services provided can be in the form of capital interest, wages, operating profit, and rent. Consumer households in economic activities must also bear the tax burden provided by the government.
The next type of economic actor is a producer household or commonly abbreviated as RTP. Organizations or business entities established by a person or group to produce goods or services to meet community needs are called producer households.
Producer households in economic activity have two important roles, namely as producers and as consumers. When carrying out their role as producers, producer households will produce goods or services.
Goods or services produced will be distributed to other economic actors in an effort to meet the needs of life. Then when carrying out their role as consumers, producer households will consume the factors of production provided by consumer households.
These factors of production will be processed through the production process. Similar to consumer households, producer households also need to bear the tax burden provided by the government.
After knowing the producer households, now is the time for Sinaumed’s to know the role of government households. This one economic actor has a special characteristic whose role is to produce goods or services to fulfill the public interest.
Government households in economic activities have three important roles, namely as producers, consumers, and controllers of the economy. Just like other economic actors, when carrying out their role as household producers, the government will produce goods or services in order to fulfill the public interest.
The production of goods or services is carried out by government agencies, namely BUMN . Then when carrying out their role as consumers, government households will allocate funds to purchase various factors of production that will be used to produce goods and services.
Meanwhile, government households will carry out their role as economic controllers by establishing policies related to the economy. The various policies implemented are fiscal policy, monetary policy, and international economic policy.
The last type of economic actor is the foreign community. This type of economic actor also has an equally important role.
The presence of foreign communities will trigger economic activity in the form of exports and imports. Then the government can earn foreign exchange from export and import activities. What is foreign exchange?
Foreign exchange is a source of state revenue that can stabilize the financial sector and economic growth. After knowing the roles of the four types of economic actors in outline, now is the time for Sinaumed’s to focus on increasing knowledge about the role of government households in economic activity.
It should be noted that the Indonesian government has an important role in supporting the running of the country’s economy. It is the duty of the government to regulate, control and control the wheels of the economy so that the country can grow and develop.
This is all done for the sake of enabling the people to live a decent and peaceful life. The government behaves as a producer and consumer in a country’s economic activities.
When acting as producers, government households are tasked with providing various public facilities. The government will monopolize production sectors, such as fuel, water and food. Then when carrying out their role as consumers, government households will consume by routine spending which consists of paying the salaries of government employees.
As previously explained, the government takes the most important part in a country’s economic activity. Broadly speaking, the task of the government in the country’s economic activities is to create a healthy and dynamic economic climate.
Government Household Functions
If summed up, here are some points of government household functions in a country’s economic activities:
- Increase employment growth and development.
- Fully responsible for the advancement or decline of the community’s economy.
- Maintaining economic stability by formulating various economic policies.
- Controlling price levels and inflation.
- Act as a supplier and demander
- Using tax proceeds to build public facilities.
- Withdraw direct tax or indirect tax.
3 The Role of Government Households in Economic Activities
As described above, in household economic activities the government has an important role in running the wheels of the economy. The country’s economy needs to be controlled with various favorable policies.
Government households as economic actors have the main role as controllers of economic policies that can prosper the entire community. The government’s economic activities include making fiscal policies, monetary policies, international financial regulations, and so on.
Fiscal policy as a government economic activity is made in relation to state income and expenditure. Then monetary policy is made by the government to regulate the amount of money in circulation in order to control the inflation rate.
Furthermore, the government makes international financial regulations in economic activities. These regulations are in the field of finance related to the international world, both economic cooperation with other countries, international trade, and so on. Other economic activities carried out by the government are preparing short, medium and long term economic plans.
The government also helps finance domestic development by borrowing from abroad. In economic activities, the government seeks to establish state companies that will function to stabilize the economy. Meanwhile, the government participates in carrying out economic activities by providing the people with currency needs and hiring skilled workers to help carry out monetary policy.
There are three important roles for government households in economic activities, namely regulators, producers and consumers. The following is a complete explanation of the three important roles of government households in economic activity.
1. Regulators
First, the role of government households in economic activities is the regulator or regulator of the economy. Government households play a role in regulating the economy for the welfare of society so that there are no gaps. In carrying out its role, government households continue to strive to create a just and equitable economy for all levels of society.
The government creates rules or regulations in the form of granting subsidies to domestic companies. Why? This is done to ensure that domestic products can compete with foreign products.
In addition, government households play a role in determining the amount of taxes. The government sets a progressive tax rate in order to create a fair policy.
The rich will be taxed high and the poor will be taxed low or even not taxed. Are there any supermarkets or minimarkets around your neighborhood?
If so, then the government is carrying out its role in regulating the economy. Because government households have the authority to issue permits for the establishment of supermarkets and minimarkets. This authority illustrates the government’s role as a regulator or regulator of the economy.
2. Manufacturers
Second, the role of government households in economic activity is producers. In carrying out this role, the government produces goods and services.
Producing households in the country are in the form of State-Owned Enterprises or abbreviated as BUMN under the auspices of the government. The State Electricity Company or PLN and PT Kereta Api Indonesia are examples of producers in government households.
3. Consumers
Consumers are the third role of government households in economic activity. Government households also have a role as consumers, as well as family households. The government in carrying out this role requires facilities and infrastructure to support the economic system.
The necessary facilities and infrastructure are purchased from producer households. In simple terms, government offices need various writing tools every day to be able to work or do activities. This need can be met if the government buys various stationery products from manufacturers or companies.
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Those are some of the roles of government households in economic activities. Harmonious synergy is needed between regulators, producers and consumers in running the wheels of the Indonesian economy so that it continues to spin. Hopefully this article is useful for adding to Sinaumed’s’ knowledge regarding the role of government households in economic activity.