Lesson 4.1.8.10
4.1.8.10 Government failure Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.8.10, Government failure: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
-
What outcome defines government failure resulting from policy intervention?
- Allocative market efficiency
- Maximised consumer surplus
- Misallocation of resources
- Complete price stability
-
Which factor causes government failure due to incomplete data on external costs?
- Regulatory capture
- Conflicting objectives
- Administrative costs
- Inadequate information
-
Balancing environmental protection against job creation is an example of which policy issue?
- Conflicting objectives
- Information failure
- Administrative costs
- Market distortion
-
Spending money on regulatory enforcement and monitoring staff is what type of cost?
- Administrative cost
- Opportunity cost
- Private cost
- External cost
-
Granting subsidies to inefficient domestic firms can create what economic problem?
- Positive externality
- Regulatory capture
- Market distortion
- Natural monopoly
-
An unexpected black market emerging after a maximum price policy is introduced is an example of what?
- Public good creation
- Unintended consequence
- Market equilibrium
- Perfect competition
-
What unintended consequence often arises when a binding price ceiling is imposed?
- Excess supply creation
- Deflationary spiral
- Black market emergence
- Falling consumer demand
-
Subsidising an already highly profitable firm leads directly to which outcome?
- Resource misallocation
- Perfect competition
- Maximum economic welfare
- Reduced national debt
-
Delays caused by extensive bureaucratic procedures and policy approval processes represent which issue?
- Negative externalities
- Price instability
- Information asymmetry
- Administrative costs
-
Why might government intervention fail to improve social welfare despite existing market failure?
- Government failure risks
- Automatic price stability
- Guaranteed welfare gain
- Promised consumer surplus
-
Setting a price ceiling below equilibrium price directly creates which market outcome?
- Persistent surplus
- Persistent shortage
- Subsidised export
- Equilibrium price
-
When regulators act in the interest of powerful industry groups rather than consumers, what has occurred?
- Administrative efficiency
- Regulatory capture
- Positive spillover
- Information failure
-
Increased government borrowing raising interest rates and reducing private investment is known as what?
- Quantitative easing
- Multiplier effect
- Liquidity trap
- Crowding out
-
What should policymakers compare when deciding whether to intervene in a failing market?
- Fixed production costs
- Gross tax receipts
- Net welfare effects
- Nominal GDP growth
-
A strict price cap that causes firms to cut vital infrastructure investment is an example of what?
- Missing market
- Consumer irrationality
- Government failure
- Free-rider problem
-
What makes correcting government failure particularly difficult compared to market failure?
- Perfect information
- Excess demand
- Political constraints
- Market mechanisms
-
High marginal tax rates caused by benefit withdrawal can create which unintended consequence?
- Moral hazard
- Liquidity trap
- Menu costs
- Poverty trap
-
What occurs when government intervention in a market leads to a net loss of economic welfare?
- Regulatory capture
- External cost
- Government failure
- Market failure
-
Setting a national minimum wage above the equilibrium rate can cause which unintended failure?
- Real-wage unemployment
- Demand-deficient unemployment
- Price deflation
- Structural surplus
-
What type of government failure occurs when policy implementation takes too long to affect the economy?
- Regulatory capture
- Conflicting objectives
- Information gaps
- Time lags
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