Knowledge and understanding: The aim of this course is to provide students with knowledge and understanding of the economic role of governments in modern market economies. Applying knowledge and understanding: By the end of the course students will be equipped with analytical tools for understanding why government provision is desirable for some goods and services but not for others; why and how governments should regulate some but not all private economic activities; how taxation and transfers affect welfare and behaviour of households and firms. Making judgements: By the end of the course, students should know how to use economic analysis to make informed judgements about the level and composition of government spending and taxation that result from actual government policies. Communication skills. Although the course is lecture-based, students will be able to test their understanding and ability to communicate knowledge of the relevant topics by self-assessment tests. These tests will be made available on the course Ariel website as the course proceeds. Learning skills. Throughout the course, topics will be presented mainly by using theoretical models, although references to public sector data and actual government policies will be made continuously. Students should be able to understand and explain the economic content, assumptions, limitations, policy implications and relevance of the models presented.