Question

What role does the government play in a market driven economy? List and discuss.

Answer 1

In a market driven economy where main players are buyers and sellers in the market,goverment tries to make an environment such that goods and services are exchanged in efficient way of the limited resources available. The list are following-

1.Infrastrucure- this is the most basic thing goverment must provide as a role to drive the market economy .The examples can be building,power generation,health and hosspital etc

2.EConomic stability-Goverment must ensure proper monetary policy and framework so that proper business and growth can happen and also with that try to minimize the effect of inflation and unemployement.A stable environment means greater chance of economic growth

3.Distribution of equity- goverment also ensure as a role player to have fair distribuition of income among people and equal chance of growth for everyone. GIni index be a tool to measure it.