Which of the following is an example of the limited role of government in the economy?

• A. Setting prices for all goods and services
• B. Determining the quantity of goods produced in every market
• C. Enforcing property rights and contracts
• D. Owning and operating all major industries

Answer: (C)

Verified step by step guidance

1. Understand the concept of the limited role of government in the economy, which typically means the government intervenes only to the extent necessary to maintain a functioning market system, rather than controlling all economic activity.
2. Identify the options that represent extensive government control, such as setting prices for all goods and services, determining quantities produced, or owning and operating all major industries. These reflect a large or central role, not a limited one.
3. Recognize that enforcing property rights and contracts is a fundamental government function that supports market operations without directly controlling production or prices. This is a classic example of a limited government role.
4. Recall that property rights and contract enforcement create the legal framework necessary for markets to function efficiently, allowing private individuals and firms to make economic decisions.
5. Conclude that among the given options, enforcing property rights and contracts best exemplifies the limited role of government in the economy.