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Why govt interfere in economic activity (at least 5 reasons)?

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Question added by Wasif Mehmood
Date Posted: 2016/02/11
Sultan Alghamdi
by Sultan Alghamdi

  1. Redistribute income and wealth aiming to improve equality.
  2. Market failure, when the market fail to produce some public goods, so government can offer subsidies.
  3. Stimulate the economy,  such as overcome recessions and decrease unemployment
  4. Combat externalities.
  5. Provide information and assure information flows.

Duncan Robertson
by Duncan Robertson , Strategy Consultant , Duncan Robertson Consultancy

One of the purposes of government is to regulate economic activity.   An example is the protection of patents: you can't protect and profit from your invention unless the government provides the legal framework.  Another is the provision of a system of money, which assists in trade.  (Yes I know you don't strictly  need a government to have money, it's just the standard system.)  Another is safety - in the absence of safety rules companies tend to reduce safety standards to gain a competitive advantage.

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