The question below contain two statements labeled as Assertion and Reason. Analyze each statement separately and use the codes given below to indicate your answer:

Assertion: Present day liberalism acknowledges a role for welfare state and accepts the need for measures to reduce both social and economic inequalities.
Reason: Historically, liberalism favoured state-controlled markets with maximum involvement of the government for development.

The Assertion is correct but the Reason is incorrect.

The correct answer is option 4 - The Assertion is correct but the Reason is incorrect.

Assertion: Present day liberalism acknowledges a role for welfare state and accepts the need for measures to reduce both social and economic inequalities.
Reason: Historically, liberalism favoured state-controlled markets with maximum involvement of the government for development.

Correct Reason: Historically, liberalism favoured free market and minimal role to the state.

As a political ideology, liberalism has been identified with tolerance as a value. Liberals have often defended the right of a person to hold and express his/her opinions and beliefs even when they disagree with them. But that is not all that there is to liberalism. And liberalism is not the only modern ideology that supports tolerance. What is more distinctive about modern liberalism is its focus on the individual. For liberals entities like family, society, community have no value in themselves, but only if these are valued by individuals. They would say, for example, that the decision to marry someone should be taken by the individual rather than by the family, caste or the community. Liberals tend to give priority to individual liberty over values like equality. They also tend to be suspicious of political authority. Historically, liberalism favoured free market and minimal role to the state. However, present day liberalism acknowledges a role for welfare state and accepts the need for measures to reduce both social and economic inequalities (ASSERTION).