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Choose the best way of writing the sentence.
A. Any action of government to reduce the systemic risk inherent in financial markets will also reduce the risks that private operators perceive and thereby encourage excessive hedging.
B. Any action by government to reduce the systemic risk inherent in financial markets will also reduce the risks that private operators perceive and thereby encourage excessive gambling.
C. Any action by government to reduce the systemic risk inherent in financial markets will also reduce the risks that private operators perceive and thereby encourages excessive gambling.
D. Any action of government to reduce the systemic risk inherent in financial markets will also reduce the risks that private operators perceive and thereby encourages excessive gambling.
The correct preposition to be used before government is 'by' and not 'of'. So, options a) and d) are incorrect.
In the second part of the sentence, which is in simple future tense, the grammatically correct form is "thereby encourage" and not "thereby encourages". So, option b) is the correct answer.
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