Government intervention

Question 1

What is government intervention in the economy?

Answer 1

Government intervention refers to the actions taken by a government to influence economic activity, often to correct market failures.

Question 2

True or False: Government intervention can lead to increased efficiency in markets.

Answer 2

False: While it aims to increase efficiency, government intervention can sometimes lead to inefficiencies.

Question 3

Fill in the blank: One common form of government intervention is __________.

Answer 3

subsidies

Question 4

What is the purpose of subsidies?

Answer 4

Subsidies are intended to lower the cost of goods and services, encouraging production and consumption.

Question 5

Multiple Choice: Which of the following is NOT a reason for government intervention? A) Correcting market failures B) Reducing competition C) Protecting consumers D) Promoting economic stability

Answer 5

B) Reducing competition

Question 6

What is a price ceiling?

Answer 6

A price ceiling is a maximum price set by the government that sellers cannot exceed.

Question 7

True or False: Price floors are designed to protect producers by ensuring prices do not fall below a certain level.

Answer 7

True

Question 8

What are externalities?

Answer 8

Externalities are costs or benefits of a market activity that affect third parties who did not choose to be involved in that activity.

Question 9

Multiple Choice: Which intervention aims to prevent monopolies? A) Price ceilings B) Regulation C) Subsidies D) Taxation

Answer 9

B) Regulation

Question 10

What is the role of regulation in government intervention?

Answer 10

Regulation aims to control or supervise economic activities to protect public interest and promote fair competition.