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Comprehension:

1. Why do governments play an important role in the economy?

2. What is known as merit goods and merit bads?

3. What did classical economists believe in?

4. Who was the opposing view presented by?

5. Name the main functions of the government in economic life.

True-false questions:

  1. Governments play an important role only in command economies.



  1. If the supply of public goods and services was left to the market mechanism – the result would be an inadequate organisation of these services.



  1. The consumption of merit bads should be discouraged by the government.



  1. Classical economists believed in maximum individual economic freedom and the minimum government regulation.



  1. The object of state intervention, according to classical economists, was to replace the market mechanism completely.



  1. One of the functions of the Government in the economic life is to promote overall economic stability and growth.