Synopsis: This is a two page APA format essay with one work cited which will address the

question of supposing that the federal, state and local governments were to engage in a massive campaign to deal with AIDS, drug abuse and other health related problems. The increase in government medical spending would require a massive tax increase. Assuming that resources and technology are fixed, describe in words what a production possibility curve would show regarding the costs of increased government health care services.

Increased Government Spending In a Production Possibility Curve

The supplying of government goods and services requires resources. These resources may include human resources and capital resources. The true expenditure of government goods and services is equivalent to the private goods and services when these resources are allocated for government use. When taxes are levied, the capacity of consumption of the citizenry is diminished. Resources that would have been allocated for use by the citizenry are allocated and used by the government. Taxes also have opportunity costs because they involve the manipulation of options. Tariffs have an impact on the price of goods and services and the consumer motivations to labor, save and distribute these goods and services.. Tariffs disable economic operations of the individuals by motivating these individuals to decide on options which are motivated by the potential benefits and expenditures of the actions, but also the potential sacrifices of these decisions. The variance in the allocation of resource usage and the decrease in production which results from the impact that tariffs have on consumer motivation is also part of the expenditure of government operations (Hyman, 2008:6).

The resources allocated to governments are used to provide their citizenry with goods and services such as health care services. These government resources are distributed among all citizenry, they do not pertain to any one citizen more than another. An increase in health care spending would limit the resources availability of other groups in the economy such as national defense, education and police protection services (Hyman, 2008:6).

The exchange between private goods and services and government expenditure can be demonstrated with the production possibility curve as demonstrated in Figure 1.1. This curve shows the effect of the increase in health care spending assuming that national resources are fully utilized. Private goods such as automobiles, computers and clothing are sold on the private market. Government goods and services such as health care, national defense and education are not sold in private markets. At point A in Figure 1.1, distribution of private goods is sacrificed by individuals in order to ensure that the government can provide increased goods (i.e., increased government medical care). The resources that would have been allocated to the production of private goods would be used by the government in order to provide increased health care services and ensure the efficient government distribution of said services to the citizenry who require them (Hyman, 2008:7).

Works Cited

Hyman, D.N. (2008) Public Finance: A Contemporary of Theory to Policy. 9th Edition ISBN: 978-0- 324-53719-2