Answer to Question #103717 in Microeconomics for Carol yonela
What role does the government play under a market economy
- Efficiency: The government should attempt to correct market failures like monopoly and excessive pollution to ensure efficient functioning of the economic system.
- Infrastructure: The government should provide an integrated infrastructure that enhance, directly or indirectly, output levels or efficiency in production.
- Equity: promote equity use taxes and spending to redistribute income toward particular groups.
- Economic Growth or Stability: rely upon taxes, expenditures and monetary regulation to foster macroeconomic growth and stability to reduce unemployment and inflation while encouraging economic growth.