Question

In what way does the government behave like a household in a mixed economy?

A) By producing goods and services for its citizens
B) By balancing its budget and managing debt
C) By providing public goods and regulating markets
D) By engaging in international trade for economic growth

Answer 1

In a mixed economy, the government behaves like a household by balancing its budget and managing debt, similar to how households monitor their finances. However, governments also have broader economic responsibilities that differ from those of a household.

Step-by-step explanation:

The government behaves like a household in a mixed economy in several ways, but option B) By balancing its budget and managing debt, is most analogous to how households manage their finances. Households must carefully balance income against expenditures and manage debts, and similarly, governments aim to balance budgets and control national debt.

However, the analogy between a household and government behavior is not perfect, as governments have macroeconomic responsibilities that households do not, such as spending to stimulate the economy during downturns or saving during prosperous times. Unlike households, the government also has the ability to influence economic outcomes through its roles as a regulator, protector, provider, and consumer of goods and services, and as a promoter of national goals in a mixed economy.