government intervention

Question 1

reasons for policy intervention

Answer 1

1) correct market failure
2) achieve a more equitable distribution of income and welfare
3) to improve the performance of the economy

Question 2

methods of government intervention

Answer 2

regulation
indirect tax
legislation
grants and subsidies
 voluntary agreements

Question 3

why is regulation used

Answer 3

protection of consumers( businesses may become too powerful)

Question 4

protecting the consumer

Answer 4

businesses have to meet certain standards
meaning telling the truth about goods and services
not attempted to deceive the customer
complying with laws relating to what they said

Question 5

why do the government redistribute the wealth

Answer 5

to keep the balance of classes

taxation- government can use taxes to provide finance to support welfare state

Question 6

progressive taxes

Answer 6

more the larger the income

Question 7

proportional taxes

Answer 7

the same level of tax regardless of income

Question 8

regressive tax

Answer 8

more the tax the lower the income