Government crowding out private investment

Steps:

• Identify objections to government provision: Focus on economic drawbacks like inefficiency or market distortion.
• Evaluate each choice: Check if it logically opposes public sector involvement in goods/services.
• Recall key concepts: Government spending can crowd out private sector activity via resource competition.
• Select valid objection: Choose the one highlighting reduced private investment as a direct downside.

Why D is correct:

• Government provision increases public spending, crowding out private investment by raising interest rates and diverting resources (per crowding-out effect in macroeconomics).

Why the others are wrong:

• A: Government provision reduces consumer sovereignty by limiting market choices, not increasing it.
• B: Merit goods (e.g., education) are often provided by government to correct market failure, not exclusively private.
• C: Government provision typically raises tax rates/income to fund services, not lowers them.

Final answer: D