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The governments of country A and country B spend the same amount each year. However, the types of spending differ dramatically between the two as

The governments of country A and country B spend the same amount each year. However, the types of spending differ dramatically between the two as the following table shows:

Share of government spending on:

Country A

Country B

functions relating to dealing with market externalities and public goods

25%

75%

the provision of merit goods and efforts to restrict the production of demerit goods 75%


25%


The country whose government is more heavily involved in the economy through economic functions of government as opposed to political functions is

(enterĀ a single letter: 'A' or'B'

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