Question

Choose the correct answer
An appropriate measure of government’s involvement in economic activity is
[1] the volume of government subsidies.
[2] the total government spending.
[3] the share of government spending in total spending in the economy.
[4] the growth of government spending.

Answer 1

[1] the volume of government subsidies.

This are the benefits offered by the government to groups, individuals, or industry in various forms such as welfare payment, tax allowance, keep prices low, induce investment to reduce unemployment. In the economy, subsidies are the ones used to offset market failures and externalities in order to achieve greater economic efficiency regardless other forms of government expenditure, hence subsidies are the appropriate measure for government's involvement in the economy since they are the ones that do balancing of the social and economic sectors development for good standards of living for the people in it.