Question

Reasons for government intervention in the economy include:


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.