When should the government interfere in the economy?

Answer 1

1. outright prohibit the exchange of certain goods (like drugs, weapons, sometimes prostitution, etc.)
2. require the exchanging parties to acquire a license (prescription drugs, business licenses, etc.)
3. restrict the possible contents of a contract (all labor laws, so called consumer protection laws, etc)
4. tax the exchange (sales tax)
5. The most important intervention, however, is controlling the intermediary of exchange, i.e. money. By requiring the exchanging parties to accept legal tender notes *all* exchanges happening on a market are subject to inflation which is in effect like a tax levied by the central bank.

Answer 2

goverment may intervene into economy because:

(i)tom provide or subsdizing provision of merits goods

ii to redestribute the wealth between the society

iii)to influence the what is consumed and what is provided in the economy

iv)to persue the macroecomic policy objective,notably the economic growth.full employment,price stabilization and balance of payment equilibrium.

Answer 3

The government already has an impact on markets. Government regulation is put in place to keep events such as the Stock Market crash of 1929 from happening again.

Answer 4

Monetary policy, fiscal policy, regulatory policy.