Question

Match the description to the most appropriate political-economic system.

This political-economic system favors free markets but a more interventionist state to redistribute wealth and protect against market failures. Answer 1

This political-economic system favors a minimal state presence in the market. This translates to low levels of regulation and a robust private sector. Answer 2

This political-economic system favors a high level of protectionism to develop the domestic economy. Answer 3

In this political-economic system, private property is eliminated and the state engages in redistribution of wealth. Answer 4

Answer 1

• Answer 1 is the appropriate match
• Government can redistribute income and wealth to improve equality of opportunity and equality of outcome.
• It can provide interventions to reduce umemployment.
• Government intervention can regulate monopolies and promote competition. Therefore government intervention can promote greater equality of income.
• To overcome market difficulties  public goods like lighthouses, police, roads,etc, can be provided, it is required for a government to pay for them and out of general taxation.
• Government regulation of monopoly can lower prices and improve economic efficiency.