Year 8 EAB: Government in the Market

In Australia, although the market generally operates efficiently, sometimes the government intervenes in the economy to improve its performance and remedy market failure. Why does the government sometimes intervene in the market?

• To make the market less efficient

• To improve the economy's performance and remedy market failure

• To increase taxes only

• To reduce competition

The government collects revenue in the form of ________.

• taxes

• loans

• donations

• gifts

The main form of tax revenue is from ________.

• income tax

• sales tax

• property tax

• excise duty

This income is allocated to provide the public with a range of ________.

• goods and services

• private investments

• personal savings

• foreign currencies

Give examples of goods and services provided by the government using tax revenue.

• Hospitals, schools, social welfare

• Luxury cars, private jets, jewelry

• Theme parks, casinos, private clubs

• Designer clothes, sports cars, yachts

Which of the following is an example of a public service funded by taxes?

• Shopping mall

• Hospital

• Private club

• Restaurant

Pollution can be an externality because:

• it imposes costs on people who are not involved in the activity causing it.

• it only affects the person or company causing it.

• it always leads to higher profits for businesses.

• it is always regulated by the government.

In economics, an externality is the impact on people not involved in producing or consuming a good or a service. The pollution resulting from the production and driving of a car illustrates an externality because:

• It affects people who are not directly involved in making or using the car.

• It only impacts the car manufacturer.

• It only benefits the car owner.

• It increases the price of cars for everyone.

Cigarettes and the tobacco industry can be considered as an externality because:

• they impose costs on others not involved in the transaction.

• they only affect the smoker.

• they have no impact on society.

• they always provide positive benefits to everyone.

The federal ______ describes how the government will spend (expenditure) and receive (revenue) for the financial year.

• budget

• policy

• agenda

• constitution