Government intervention
What Government intervention means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Government intervention
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Reference: Pearson Edexcel
Direct government action, such as progressive taxation, welfare benefits, minimum wage legislation, and investment in education and healthcare, used to reduce poverty.
Governments intervene to correct market failure using various policies, including provision of goods, taxation, permits, information, legislation and regulation.
Policies such as carbon taxes or strict environmental regulations designed to internalise external costs, which can raise production costs for firms.
The state providing financial support through direct grants, subsidies or tax credits to encourage research and development.
The use of taxation and the provision of services to redistribute income and wealth, reducing inequality.
Action by governments, often using taxes or regulations, to internalise environmental impacts.
Topics that use Government intervention
- Externalities (Pearson Edexcel A-Level)
- Policies to deal with market failure (Pearson Edexcel A-Level)
- Potential policy conflicts and trade-offs (Pearson Edexcel A-Level)
- Re-distribution of income and wealth (Pearson Edexcel A-Level)
- Reducing poverty (Pearson Edexcel A-Level)
- Research and development (R&D) and innovation (Pearson Edexcel A-Level)
Related terms
- Market failure
- Aggregate demand
- Competitive advantage
- Demand-pull inflation
- Economic development
- Economic growth
- Economic trade-offs
- Extension strategies
Using Government intervention in the exam
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