Question

3) Which of the points below shows a positive effect of government's intervention in an a Government lowers the risk of some economic activities. . Government expenditure often involves unforeseen costs. 6 Government spending often distorts allocation of resources, d Government expenditures require taxes and/or borrowing that burdens the economy 4) Which of the characteristies below is does not fit the liberal model of the welfare state? a. Means tested benefits Redistribution Labor as the alternative to receiving benefits. Social safety through market mechanisms.

Answer 1

3. Option (A) Government lowers risk of some economic activities is correct

This option is correct because the government intervention is important in situation of economic crisis. The government stimulates the output level by increasing the spending at the time of recession. Employment generation is possible only when government increases its outlay.

4. Option(C) Labor is alternative to receiving benefits is correct

This option is correct because the welfare state is possible only when the resources are properly distributed from rich to less privileged. The labor is not always an alternative of receiving benefits as there are other individuals also which require the social security schemes.