OCR GCSE Economics (J205): Government policy and market failure overview quiz quiz

interest rates and the money supply

exchange rates and trade barriers

government spending and taxation

education and training only

Raising income tax to reduce households' spending power

Raising interest rates to make borrowing more expensive

Cutting the money supply to slow lending

Increasing government spending on infrastructure

the Bank of England

the Treasury department

Parliament and its committees

elected local councils

cut interest rates

raise interest rates

increase government spending

lower taxes

£10

£200

£100

£1,000

raise total demand quickly by boosting spending

set the exchange rate against other currencies

increase the budget deficit to fund tax cuts

raise the economy's productive capacity

Income tax

VAT

Fuel duty

A tax on cigarettes

progressive

regressive

proportional

direct

a benefit enjoyed by the buyer who purchases the good in the market

a tax that a firm pays directly to the government on its profits

a cost imposed on a third party not involved in the transaction

a profit made by a firm from selling its output

Because they are too expensive for any private firm to ever produce profitably

Because nobody in society actually wants or benefits from them

Because they are demerit goods that harm the people who consume them

Because they are non-excludable, so people can free-ride without paying

over-consume because people underestimate its harms

under-consume because people overvalue its private benefits

never produce at all because it is banned outright

provide completely free of charge to every consumer

A subsidy paid directly to the polluting firm

An indirect tax on the firm's output

Lower interest rates to encourage more borrowing

Direct government provision of the polluting good