Reasons for government intervention in the economy include:

Question

income distribution

macroeconomic growth and stability

merit goods

all of the above

Question 35
Question 35

Answer 1

The correct answer is "all of the above."

Government intervention in the economy can be justified for various reasons, including:

1. Income distribution: To address inequalities in income and wealth that can arise in a free market, governments may implement policies such as progressive taxation or social welfare programs.

2. Macroeconomic growth and stability: Governments may intervene to promote economic stability and growth by regulating monetary policy, fiscal policy, and implementing measures to combat inflation and unemployment.

3. Merit goods: These are goods that the government believes are under-consumed in a free market due to lack of information or access (e.g., education, health care). Governments may provide or subsidize these goods to ensure they are available to all citizens.

Thus, all of these factors are valid reasons for government intervention in the economy.