government intervention in most of the countries, the government has intervened in the market system.

To some extend there is a dire need of government intervention in the market system, although there is a debate over the point among the economists. Many economists believe that the role of government intervention improves the scenario of the market system. The government can easily enforce the rules that can help in smooth functioning of the market system. On the other hand, there are economists who believe that government interventions in a market system are the reason of inefficiency in the system. Anyway, the amount of government intervention needed in a market system is dependent on the state of a particular economy (Brodsky 1963) . types of government intervention Taxes A government can levy taxes on its citizens in order to create social programs, build infrastructure and create a military. Many of these services would not be created in a purely market-based system. The taxes collected are meant to go toward worthy programs that help the citizens of the country. While some museums or libraries might not be profitable, the government still deems them necessary because they serve a public good. In a free market system, free book rentals might not exist---with taxes they can.

Subsidies The government gives certain sectors subsidies to produce goods. These goods might not be produced otherwise because they are not profitable on the free market. The government gives subsidies to lower prices on goods so exports increase. They might also give subsidies to keep the cost of food low so living expenses would not increase. Without subsidies, jobs could leave a particular country because costs are lower elsewhere Tariffs Tariffs put a tax on imported goods to make domestic products more competitive. If a good from a foreign country costs one dollar while the good domestically costs two dollars, a two dollar tariff on the imported good would make it relatively more expensive for domestic consumers. This keeps demand high within the country and helps to keep people employed. It can also keep prices from lowering. With a free market system, people would buy the cheapest good, even if it came from outside of the country.

Wages Governments can create a minimum wage for all workers. This means that no matter the job and responsibilities, a worker must be paid at least a certain wage. On the free market, the worker might

be paid less. The government determines that anything lower than the minimum wage is not enough for a person to live on. The minimum wage also forbids workers from selling their labor at a lower rate, meaning people cannot out-price the competition

BENEFITS OF GOVERNMENT INTERVENTION IN THE MARKET SYSTEM

The government intervention in the market system has the following positive effects in the market (ilri.org2007 [online]): Improvement in the market structure: one of the most important aspects of government intervention in the market system is the fact that it brings about an improvement in the market facilities, roads and other desired infrastructure in the market.

Improvement in the institutional infrastructures: Goverment intervention plays an important in role in regulating the corruption and violence in the market system.

Price control by government interventions: The government intervention in the market system avoids the excessive hike in prices by the market leaders.

DRAWBACKS OF GOVERNMENT INTERVENTION IN THE MARKET SYSTEM:

Like every coin that has two faces, the government intervention in the market system too has some draw backs in its end and here are a few (wikipedia2007 [online]): The procedures of the government are generally cumbersome. This leads to inefficiency in the market system. Most of the time, the marketing boards waste a lot of time and money in holding unnecessary meetings and form reports that delay the decisions in a market system to a great extent. The lack of incentives to the government employees increases the inefficiency in the market system. Normally the low salaries provided by the government to the members of the marketing boards leads to corruption in the market system. Great amount government intervention in the market system results in stopping the transmission of information that is vital for the smooth operation of the market system.

According to Milton Friedman, government intervention in the market system can result in increase inflation, causing deflation, recessions as well as economic depressions.

Although the economists have a mixed view about the importance and effects of government intervention in the market system, it can be said that government interventions should aim at working with the market system that is already existing rather than implementing policies that make great changes (papers4you2007[online]). If the government intervention is such that it introduces inefficiencies greater than rationalizing the entire market system, there is a threat of damaging the economy. The distorted government intervention can lead to consumer dissatisfaction and higher costs. Most of the economists are of the view that government interventions should be facilitating in nature rather than having a direct control over the market