Outline the macro policy options for government intervention. Solution An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud and enforcement of contracts and provision of public goods. One of the common ways of government intervention is to provide direct expenditures to ascertain the production of goods that are socially beneficial. Another method include the right to regulate certain activities for economic, social or other purposes. For instance, many industries have market structures that lead to concentration or monopoly (e.g. railroads, airlines). Rather than provide these services directly, many governments have chosen instead to maintain private provision, subject to some form of regulation. Where other forms of regulation are deemed infeasible for dealing with potential market failure problems, governments may simply choose to directly provide a good or service through a public agency or state-owned enterprise.

1. Outline the macro policy options for government intervention.
Solution
An economic intervention is an action taken by a government or international institution in a
market economy in an effort to impact the economy beyond the basic regulation of fraud and
enforcement of contracts and provision of public goods.
One of the common ways of government intervention is to provide direct expenditures to
ascertain the production of goods that are socially beneficial.
Another method include the right to regulate certain activities for economic, social or other
purposes. For instance, many industries have market structures that lead to concentration or
monopoly (e.g. railroads, airlines). Rather than provide these services directly, many
governments have chosen instead to maintain private provision, subject to some form of
regulation.
Where other forms of regulation are deemed infeasible for dealing with potential market failure
problems, governments may simply choose to directly provide a good or service through a public
agency or state-owned enterprise