Government intervention
What Government intervention means in Economics GCSE, as defined for AQA.
Definitions of Government intervention
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Reference: AQA
Policies used to correct market failures caused by externalities, aiming to reduce production or consumption of goods with negative externalities and increase consumption of goods with positive externalities.
Action by the UK government through progressive taxation and the welfare system to redistribute income from higher earners to lower-income households to reduce inequality.
Policies used by governments to redistribute income and wealth, such as progressive taxation, transfer payments and investment in public services.
The government's dual role of collecting taxes from consumers and producers and providing public goods, services and transfer payments to them.
Taxes increase costs and decrease supply, while subsidies reduce costs and increase the willingness and ability to supply.
Indirect taxes increase production costs and decrease supply, whereas subsidies lower costs and increase supply.
Topics that use Government intervention
- Distribution of income (AQA GCSE)
- Economic activity (AQA GCSE)
- Policies to correct positive and negative externalities (AQA GCSE)
- Supply for goods and services (AQA GCSE)
Related terms
- Resource allocation
- Technological change
- Aggregate demand
- Asset accumulation
- Basic economic problem
- Change in supply
- Circular flow of income
- Consumers
Using Government intervention in the exam
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