Which of the following are the roles of government in the economy:
Provision of public goods
Provision of merit goods
Poverty reduction
Select the correct answer using the codes given below:
Options:
A . 2 only
B . 3 only
C . 1 only
D . 1, 2 and 3
Answer: Option D Answer: (d) Provision of public goods like a defence which no private agency can be entrusted with. Provision of merit goods - goods like education and housing - through policies that encourage the consumption of such goods and discourage the use of non-merit goods like cigarettes. Poverty reduction is considered a prime responsibility of all modern governments, as the market caters to the needs of only those who can afford to pay, not of the poor.
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