1. When the economy is experiencing boom or the level of aggregate demand in the economy exceeds the potential level of output in the economy, then government expenditure has to be contracted. This contraction in the government expenditure will shift the aggregate demand leftwards and thus take the economy to its potential level. Decline in the production of the firm will also shift the aggregate supply of the economy leftwards and move the economy to its equilibrium level. 2. Private players in the market are profit maximizers and concentrate less on social objectives of welfare and increasing the total surplus of the economy. Especially in considering provision of merit goods like education, public health and public good like creation of public park, highways etc, private players do not come forward as this involves some losses due to problem of free riding in case of public goods. Thus, contracting out any government service to some private firm is not the best way of providing it