ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -However, according to Samuelson and other modern economists, governments have four main functions in a market economy-to increase efficiency, to provide infrastructure, to promote equity, and to foster macroeconomic stability and growth.

Detailed explanation-2: -Economists, however, identify six major functions of governments in market economies. Governments provide the legal and social framework, maintain competition, provide public goods and services, redistribute income, correct for externalities, and stabilize the economy.

Detailed explanation-3: -One of the most important characteristics of a market economy, also called a free enterprise economy, is the role of a limited government. Most economic decisions are made by buyers and sellers, not the government.

Detailed explanation-4: -Government intervention in the economy is inevitable as certain roles and responsibilities cannot be assumed by the private sector. Governments are meant to guide and direct the pace of economic activity in the country. It also needs to ensure stable growth, high employment, and price stability.