3.2 (Pt. 1) - Why Governments Intervene in the Economy & Tax

Question 1

What are the first three reasons governments intervene in the economy (benefits for the public) (ESE)?

Answer 1

These first three reasons (benefits for the public) are:
1. To ensure the most efficient and productive use of resources.
2. To optimise the use of our economic resources, as Earth’s resources are finite, and maximise their benefit.
3. To establish laws and infrastructure to ensure the economy operates efficiently and effectively.

Question 2

What are the last three reasons governments intervene in the economy (benefits for and individual) (ERB)?

Answer 2

The last three reasons (benefits for an individual) are:
4. To establish and maintain basic living standards.
5. To redistribute income and avoid huge differences in wealth.
6. To balance competing economic and social interests (eg. economic growth vs environmental sustainability).

Question 3

How do governments intervene in the economy?

Answer 3

Governments intervene in the economy by collecting tax to pay people who need subsidies.

Question 4

What are the three types of tax?

Answer 4

The three types of tax are:
1. GST (Good Services Tax)
2. Income Tax
3. Company Tax

Question 5

In what 4 areas is collected tax being spent on (LHME)?

Answer 5

These 4 areas are:
1. Low-income earners
2. Healthcare (The State Government is responsible for hospitals, whilst the Local Government is responsible for community and home care)
3. Medicare (free and funded access to health professionals, such as doctors)
4. Education (Early Childhood Education, Primary Education, Secondary Education, Tertiary Education)