Within a mixed economic system, such as Portugal’s, the government has a role in the economy. Government intervention can be used to deal with market failure and to meet economic aims, such as keeping inflation under control. In 2017, one-fifth of Portugal’s population was living in poverty and government spending increased.
(a)[2]
Identify two causes that can lead to market failure.
(b)[4]
Explain how resources are allocated in a mixed economic system.
(c)[6]
Analyse how a high rate of inflation may harm the poor.
(d)[8]
Discuss whether increasing government spending will help a government achieve its economic aims.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “External costs or external benefits” …