Question

In a mixed-market economy, the government regulates business ...

Answer 1

I would say A because according to Adam smith, he specializes on a free market system without the Government intervention, so the government has to stay out of the economy.

Answer 2

The correct answer is B.

Pure market economies do not exist because when markets are allowed to freely function, and economic decisions are reached by the interaction of individuals, firms and goverment in the markets, these lead to sharply unequal outcomes and social welfare is threatened.

In turn, mixed market economies are established, where economic authorities implement income redistribution systems that reduce income inequalities and generate fairer outcomes for all the individuals that conform a society. Therefore, these redistribution systems and the goverment intervention in the economy are part of the regular functioning of this type of economies.