Political Economy Economic Systems Questions
In a capitalist economy, the role of government is primarily to create and enforce a legal framework that ensures the functioning of markets and protects property rights. The government's main responsibilities include maintaining law and order, enforcing contracts, regulating monopolies, and providing public goods and services that are not efficiently provided by the private sector. Additionally, the government may intervene in the economy to address market failures, such as externalities or information asymmetry, through the implementation of regulations or the provision of subsidies. However, the extent of government intervention in a capitalist economy can vary depending on the specific country and its political and economic ideology.