Individuals and Government INSTRUCTIONAL OBJECTIVES Chapter 1 is a general introduction to the field of public finance, emphasizing the relationship between individuals and government. The functions of government are outlined, and the importance of taxes in household budgets is highlighted. The chapter seeks to develop an understanding of the economic role of government as a supplier of useful goods and services. Students are also expected to digest data on the actual extent of government activity in the United States and other nations. They should know the current structure of government expenditures and revenues in the United States, how government has grown since 1920, and how the structure of federal government spending has changed since 1960. In addition, the chapter seeks to demonstrate that the problem of scarcity implies that an increase in resources devoted to government goods and services decreases availability of resources for nongovernment uses. It is also made clear to students how government provision of goods and services differs from market provision of goods and services. CHANGES IN THIS EDITION  Chapter 1 discusses the growth in government spending, the impact of slow economic growth on public finance on the federal, state and local government levels, and health care issues.  All data on government spending and revenues have been updated to the latest available year. Public expenditure data have been revised using the latest National Income and Product Account (NIPA) figures for government consumption and investment, documenting the rise in the share of the public sector as a share of GDP since 2001.  The International View on government spending has been revised and updated with the latest data.  Discussion of mandatory versus discretionary federal government spending has been added.  Graphs have been redone to reflect the latest available observations.