Answer to Question #148175 in Macroeconomics for Tebogo kgotswani

Question

Give a reasons for government intervention

Answer 1

1) lack of perfect competition in reality;

2) the unavailability of all information for market entities and the inability of the market to achieve complete equilibrium;

3) the need for social redistribution of goods in accordance with factors beyond the control of the market;

4) the absence of many types of markets in a sufficiently developed form (for example, futures and insurance);

5) the presence of external factors (externalities) that require compensatory actions;

6) the existence of significant areas related to the creation and consumption of public goods (defense services, basic science, etc.);

7) differentiation of "worthy needs" and those that need to be reduced in interest (alcohol, tobacco, drugs, etc.).