Question

Describe briefly role of government in an economy.

Describe the role of government in an economy.

Answer 1

The activities of the government as an economic agent in any country are listed below:

1. The Government supplies different public goods e.g., parks, roads, bridges, etc. in an economy. 
2. The Government incurs consumption expenditure for purchasing various consumption goods e.g. purchase of shoes, clothes for defence, etc. 
3. The Government makes investment expenditure for helping the process of capital formation in the economy. 
4. The Government regulates the total supply of money in an economy. 
5. The Government also frames different economic policies e.g., tax policy, trade policy, industrial policy, etc. for the smooth operation of the economy. 
6. The Government provides primary health and education facilities for the benefit of the common people.