[endisneigh]

Modern governments usually provide liquidity by simply printing money out of thin air and giving it to those who need it. This causes inflation potentially but is thought to be a fair trade for stimulus.

What "entity" would give people bitcoins?

[piracy1]

Oh, well that's kinda the whole point, it has real value beyond the whims of a centralized body, you can't do that, save for a rainy day.

[cfcosta]

None actually, inflation is felt immediately on Bitcoin. The government would have to keep their books in order, which thankfully crypto also helps.

Market making in crypto is usually done by overcollateralized liquidity pools, farming and staking.