CH 2.2 : Public Sector Intervention

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What is the main goal of setting minimum prices?

To reduce surpluses

To guarantee incomes for producers (correct)

To increase demand

To promote consumer welfare

Which of the following is an example of a merit good?

Fast food

Private cars

Street lighting

Education (correct)

What is a potential negative effect of setting minimum wages too high?

Increased economic growth

Increased employment

Negative impact on employment (correct)

Reduced exploitation of workers

What is the term for goods and services that are non-excludable and non-rivalrous?

Public goods Signup and view all the answers

Why might the state engage in the production of goods and services?

To address market imperfections Signup and view all the answers

What is the term for government support given to individuals who are unable to participate fully in the economy?

Welfare Signup and view all the answers

What can be a consequence of price floors and ceilings?

Distortion of the natural balance of demand and supply Signup and view all the answers

What is a proposed way to alleviate poverty and stimulate economic activity?

Basic income grants Signup and view all the answers

Why might the state maintain strategic control in certain sectors?

To ensure national security and economic stability Signup and view all the answers

What is a key challenge for governments when intervening in the economy?

Balancing interventions with economic efficiency and growth Signup and view all the answers

What is the primary role of the public sector in the economy?

To address market failures and redistribute income Signup and view all the answers

Which of the following is a reason for public sector intervention in the economy?

To address market failures Signup and view all the answers

What is the purpose of government spending in the public sector?

To allocate resources across various sectors Signup and view all the answers

What is the primary goal of regulation in the public sector?

To ensure fair pricing and economic equity Signup and view all the answers

What is the purpose of subsidies to consumers?

To make essential goods more affordable Signup and view all the answers

What is the purpose of indirect taxes, such as Value-Added Tax (VAT)?

To discourage consumption and raise revenue Signup and view all the answers

What is the primary purpose of price controls?

To ensure fair pricing and economic equity Signup and view all the answers

What is the consequence of setting price ceilings too low?

Shortages and black markets Signup and view all the answers

What is the purpose of direct taxes, such as income taxes?

To fund public services Signup and view all the answers

What is the primary goal of public sector intervention in the economy?

To address market failures and promote social welfare Signup and view all the answers

What is the primary effect of setting a minimum price above the market equilibrium?

A surplus of the good Signup and view all the answers

Which of the following is a characteristic of public goods?

They are non-excludable and non-rivalrous Signup and view all the answers

What is the primary purpose of social safety nets?

To support individuals who are unable to participate fully in the economy Signup and view all the answers

What is the term for the process of selling state-owned enterprises to private investors?

Privatization Signup and view all the answers

What is the primary goal of public sector intervention in the economy?

To address market imperfections Signup and view all the answers

What is the consequence of setting a price ceiling too low?

A shortage of the good Signup and view all the answers

What is the primary purpose of welfare provision in the public sector?

To support individuals who are unable to participate fully in the economy Signup and view all the answers

What is the primary goal of state production?

To maintain strategic control in vital sectors Signup and view all the answers

Why might the state engage in the production of goods and services?

To provide goods and services that are not adequately provided by the private sector Signup and view all the answers

What is the primary challenge of public sector intervention in the economy?

To balance interventions with the need for economic efficiency and growth Signup and view all the answers

What is the primary reason for the public sector to intervene in the economy?

To address market failures Signup and view all the answers

Which of the following is a form of public sector intervention?

Taxation Signup and view all the answers

What is the purpose of government subsidies to producers?

To support industries crucial for economic stability Signup and view all the answers

What is the consequence of setting maximum prices (price ceilings) too low?

Shortages and black markets Signup and view all the answers

What is the primary goal of direct taxes, such as income taxes?

To fund public services Signup and view all the answers

What is the purpose of indirect taxes, such as Value-Added Tax (VAT)?

To raise revenue for the government Signup and view all the answers

What is the primary goal of public sector regulation?

To ensure fair pricing and economic equity Signup and view all the answers

What is the purpose of government spending in the public sector?

To allocate resources across various sectors Signup and view all the answers

What is the primary reason for the public sector to provide public goods?

To ensure social welfare Signup and view all the answers

What is the consequence of setting price floors too high?

Surpluses and unemployment Signup and view all the answers

What is the primary role of the public sector in addressing market failures?

To correct externalities and monopolies Signup and view all the answers

What is the main purpose of government subsidies to producers?

To support industries crucial for economic stability Signup and view all the answers

What is the consequence of setting maximum prices (price ceilings) too low?

Shortages and black markets Signup and view all the answers

What is the primary purpose of taxation in the public sector?

To fund public services Signup and view all the answers

What is the primary goal of public sector intervention in the economy?

To address market failures Signup and view all the answers

What is the primary purpose of government spending in the public sector?

To fund public services Signup and view all the answers

What is the primary reason for the public sector to provide public goods?

To address market failures Signup and view all the answers

What is the primary purpose of indirect taxes, such as Value-Added Tax (VAT)?

To raise revenue Signup and view all the answers

What is the primary purpose of direct taxes, such as income taxes?

To fund public services Signup and view all the answers

What is the primary purpose of government regulation in the public sector?

To ensure fair pricing and economic equity Signup and view all the answers

What is a potential consequence of setting minimum prices above the market equilibrium?

Surplus of the good Signup and view all the answers

Which of the following is a characteristic of merit goods?

They provide significant societal benefits Signup and view all the answers

What is the primary goal of state production in the economy?

To ensure national security and economic stability Signup and view all the answers

What is the primary challenge of public sector intervention in the economy?

Avoiding market distortions Signup and view all the answers

What is the primary purpose of social safety nets?

To support individuals who are unable to participate fully in the economy Signup and view all the answers

What is the primary effect of setting a maximum price (price ceiling) below the market equilibrium?

Shortage of the good Signup and view all the answers

What is the primary goal of public sector regulation?

To correct market imperfections Signup and view all the answers

What is the primary purpose of basic income grants?

To alleviate poverty and stimulate economic activity Signup and view all the answers

What is the primary effect of setting a minimum wage above the market equilibrium?

Reduced employment Signup and view all the answers

What is the primary purpose of privatization?

To reduce public sector burdens Signup and view all the answers

CH 2.2 : Public Sector Intervention

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Questions and Answers

What is the main goal of setting minimum prices?

Which of the following is an example of a merit good?

What is a potential negative effect of setting minimum wages too high?

What is the term for goods and services that are non-excludable and non-rivalrous?

Why might the state engage in the production of goods and services?

What is the term for government support given to individuals who are unable to participate fully in the economy?

What can be a consequence of price floors and ceilings?

What is a proposed way to alleviate poverty and stimulate economic activity?

Why might the state maintain strategic control in certain sectors?

What is a key challenge for governments when intervening in the economy?

What is the primary role of the public sector in the economy?

Which of the following is a reason for public sector intervention in the economy?

What is the purpose of government spending in the public sector?

What is the primary goal of regulation in the public sector?

What is the purpose of subsidies to consumers?

What is the purpose of indirect taxes, such as Value-Added Tax (VAT)?

What is the primary purpose of price controls?

What is the consequence of setting price ceilings too low?

What is the purpose of direct taxes, such as income taxes?

What is the primary goal of public sector intervention in the economy?

What is the primary effect of setting a minimum price above the market equilibrium?

Which of the following is a characteristic of public goods?

What is the primary purpose of social safety nets?

What is the term for the process of selling state-owned enterprises to private investors?

What is the primary goal of public sector intervention in the economy?

What is the consequence of setting a price ceiling too low?

What is the primary purpose of welfare provision in the public sector?

What is the primary goal of state production?

Why might the state engage in the production of goods and services?

What is the primary challenge of public sector intervention in the economy?

What is the primary reason for the public sector to intervene in the economy?

Which of the following is a form of public sector intervention?

What is the purpose of government subsidies to producers?

What is the consequence of setting maximum prices (price ceilings) too low?

What is the primary goal of direct taxes, such as income taxes?

What is the purpose of indirect taxes, such as Value-Added Tax (VAT)?

What is the primary goal of public sector regulation?

What is the purpose of government spending in the public sector?

What is the primary reason for the public sector to provide public goods?

What is the consequence of setting price floors too high?

What is the primary role of the public sector in addressing market failures?

What is the main purpose of government subsidies to producers?

What is the consequence of setting maximum prices (price ceilings) too low?

What is the primary purpose of taxation in the public sector?

What is the primary goal of public sector intervention in the economy?

What is the primary purpose of government spending in the public sector?

What is the primary reason for the public sector to provide public goods?

What is the primary purpose of indirect taxes, such as Value-Added Tax (VAT)?

What is the primary purpose of direct taxes, such as income taxes?

What is the primary purpose of government regulation in the public sector?

What is a potential consequence of setting minimum prices above the market equilibrium?

Which of the following is a characteristic of merit goods?

What is the primary goal of state production in the economy?

What is the primary challenge of public sector intervention in the economy?

What is the primary purpose of social safety nets?

What is the primary effect of setting a maximum price (price ceiling) below the market equilibrium?

What is the primary goal of public sector regulation?

What is the primary purpose of basic income grants?

What is the primary effect of setting a minimum wage above the market equilibrium?

What is the primary purpose of privatization?

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