Reasons for government intervention in the economy include:

Question

income distribution

macroeconomic growth and stability

merit goods

all of the above

Answer 1

The correct answer is: all of the above.

Government intervention in the economy can be motivated by various reasons, including:

1. Income Distribution: To address inequalities in income and wealth, governments may implement policies like progressive taxation and social welfare programs.

2. Macroeconomic Growth and Stability: Governments intervene to foster economic growth, stabilize the economy during recessions or booms, and manage inflation.

3. Merit Goods: These are goods that are deemed socially desirable, such as education and healthcare, which may be underprovided in a purely free market. Governments often step in to ensure they are available to all.

Thus, all these factors contribute to the rationale for government intervention in the economy.