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Government is a system by which society organizes and allocates authority to accomplish collective goals and provide benefits for its citizens. It is typically organized into distinct institutions called branches of government, with each branch having its own powers and functions. Governments vary by country and type, but they usually share a few basic characteristics:

A government consists of an organization that has the power to make laws and enforce those laws. This organization may also have the power to manage resources, take care of the environment, and ensure that its members are safe and secure. Governments are often organized into levels: national, state, and local. These levels can be illustrated with the concept of a ladder, with the national level at the top and the local level at the bottom. Each level can only pass laws that do not conflict with those of the level above.

Most governments have representatives elected by their constituents to make laws for the whole population. The number of voters who have this power varies by country, but in the United States it is 435 people per state (although those numbers get changed every 10 years).

Local governments have city councils, which are supervised by mayors. These bodies oversee city budgets and projects; develop and pass ordinances; and provide recreational, educational, and social services. They also administer justice, typically through municipal courts. These courts handle low-level violations, like traffic tickets and disorderly conduct, and cases that violate state laws are transferred to higher-level district or circuit courts.

While some people have the view that governments should not be involved in areas such as health and education, others feel they are needed to manage negative externalities—such as overfishing or global warming—or to protect the rights of individuals. Governments can do this by setting regulations that limit or prevent certain activities. They can also regulate the activities of businesses to ensure that they are not endangering their communities.

Managing such activities and protecting the rights of citizens can be expensive, and many countries do not have enough revenue to pay for all that they want or need to do. As a result, many governments must borrow money to cover their expenses. One method they use to raise funds is to sell bonds to investors. When a bond is sold, the investor pays money now in exchange for an IOU from the government that will be redeemable at a future date, for the original amount plus interest. The government can then spend that money on the things it needs to do. This is sometimes referred to as “borrowing in one’s own currency.”