Chapter 24 The role of government

Question 1

Govt role as producer (2)

Answer 1

Nationalised industries
- natural monopoly
- Strategic Industries
- National Champions

Provide goods that are under/not provided by the free market
- Merit goods, public goods

Question 2

Govt role as employer (2)

Answer 2

Increase employment

influence wage in private sector by setting higher/lower wage for public sector

Question 3

Define natural monopoly

Answer 3

A firm that produce goods at a lower ATC because of significant EoS

Question 4

Define strategic industries

Answer 4

Industries that are important for economic development or safety/security of a country

Question 5

Define national champions

Answer 5

Industries that have potential to be world leaders

Question 6

Ways govt get involved in international trade (3)

Answer 6

Trade blocs - a group of countries that remove trade restrictions between them

Tariffs

encourage/discourage MNCs

Question 7

Why might govt want to attract MNCs (2)

Answer 7

Create more jobs

Greater output

Question 8

Why might govt prevent MNCs

Answer 8

MNCs might drive domestic firms out of business