financial institutions (1 Viewer)

[joshdavid]

what role does the govt play in order to contribute to the efficient operation of the financial system in performing this function????

plz reply URGENT

 

[ari89]

lol...gee that looks exactly like the essay question.

 

[Demandred]

Theoretically, nothing. The market will work itself out.

Practically, ensure the market is operating as best as it can - provision of information, reduction in assymetric information, ensure property rights are fully defined.

 

[GreenLeaf]

income tax, GST, and you might want to mention the Reserve Bank of Australia.

 

[Demandred]

I thought taxes distort the markets.

 

[UWS-Uni-Student]

Taxes like any interference in the market (think regulation) prevents the establishment of a free market.

 

[vojnik]

A market can be free with regulation. If there wasnt any regulation, all markets would end up in anarchy.

The right amount of regulation creates the perfect equilibrium of a perfectly competitive market and one that maintains a level of acceptable integrity, without suffocating it with over regulation.