The role of government

Which factor is most likely to lead to a more even distribution of income?

Feb/March 2020

The diagram illustrates some chosen categories of government expenditure for a country. What was the total amount of government spending on merit goods?

Feb/March 2021

It is thought that around half of Egyptian men smoke, a figure that is among the highest in the world. Over recent years, the Egyptian government has raised the cigarette tax. The government and the central bank have also attempted to bring inflation down and strengthen Egypt’s performance in international trade. The Egyptian government could use subsidies to cut its deficit on the current account of its balance of payments.

Feb/March 2021

New Zealand is a high-income country with a low unemployment rate and imports that exceed exports. More recently, its government has taken some significant economic decisions. In 2022, it prohibited anyone born after 2008 from buying cigarettes. The year before that, it allowed firms to explore for oil in the country.

Feb/March 2024

South Korea makes use of both economic goods and free goods. Its output includes products with both elastic and inelastic supply. The country is constructing what is expected to become the world’s first floating city, with an estimated cost of $180bn. This is intended to deal with rising sea levels brought about by climate change. Governments use several policies to cut greenhouse gases, which contribute to climate change, including banning the burning of wood for home heating.

Feb/March 2025

A government chooses to introduce two alterations to its taxation policy. It cuts the tax on petrol and increases the tax on food. How will these alterations influence the regressive character of the taxes?

May/June 2016

The table presents a government's tax receipts. What is the overall amount of revenue generated by indirect taxes?

May/June 2016

A government wants to attempt to make income distribution in the country more equal. Which policy would be most likely to bring this about?

May/June 2017

The table displays the tax amount payable at different weekly incomes. Which statement describes how the income tax system changes as income increases over this range?

May/June 2018

The diagram illustrates the demand curve $D_1$ and supply curve $S_1$ for a good. The government then grants a subsidy to stimulate production. What will be the government’s total cost of providing the subsidy?

May/June 2019

Why could a government choose to subsidise a steel industry with high production costs?

May/June 2019

At times, the government controls the market in order to safeguard consumers' interests. Which type of regulation would provide this protection?

May/June 2019

Study the source material thoroughly before you answer Question 1. Source Material: Morocco’s blue economy The World Bank says a ‘blue economy’ is one that makes sustainable use of ocean resources to drive economic growth and to create jobs that raise people’s living standards. Using the blue economy to the full could lower poverty levels among fishermen. Across the world, many fishermen remain poor because pay is low and unemployment is both seasonal and structural. Morocco is Africa’s main supplier of fish. Even with its long coastline, the fishing industry now adds only a very small amount to Morocco’s GDP. The government therefore wants the industry to expand further. Policy measures such as subsidies for fishermen could enable Moroccan fishermen to raise productivity and cut competition from overseas. The United Nations’ Food and Agricultural Organisation (FAO) predicts that Moroccan fisheries’ output could increase to almost 2 million tonnes of fish each year by 2030. Worldwide demand for fish is also rising sharply as more people view fish as healthier than meat. Growth of this kind could help to shrink Morocco’s current account deficit in its balance of payments. A greater reliance on the primary sector may not raise living standards in Morocco because some other countries that have pursued the same route have produced disappointing results. Fig. 1.1 shows the GDP per head ($) and percentage (%) contribution of the primary sector to GDP of selected countries. Environmentalists are concerned that fishing in Morocco is not properly regulated. If overfishing takes place, fish stocks would fall for future generations. However, if fish stocks are preserved, the economy can keep its rapid economic growth rate. At a time when African countries are reducing trade protection, a sustainable fishing industry could be very beneficial for Morocco’s future.

May/June 2021

Setting a ceiling price for a good is an example of what kind of government policy?

May/June 2023

A government wants to raise its expenditure on public goods. Which sector should receive a rise in spending to make this happen?

May/June 2023

Which of the following is not a function of central government in a mixed economy?

May/June 2024

The diagram illustrates selected categories of government expenditure for a country. What was the total government expenditure on merit goods?

May/June 2024

What is most likely to be one responsibility of a government?

Oct/Nov 2015

A government chooses to transfer the monopoly supply of gas to households to a private firm. How might the government safeguard the interests of households after transferring a large company to the private sector?

Oct/Nov 2016

The graph illustrates the percentage of income paid as tax. Which line indicates a proportional tax?

Oct/Nov 2017

The graph illustrates the percentage of income that is paid as taxation. Which line is the proportional tax?

Oct/Nov 2017

A purpose of government policy is to use taxation to redistribute income so that inequality is reduced. Which policy would accomplish this aim?

Oct/Nov 2019

Estonia has among the world's fastest internet speeds. The government permits both direct and indirect taxes to be paid online. According to the World Bank, it is very easy for a firm to obtain construction permits and register property in Estonia. A low level of government regulation influences how easy it is to start up and run a firm. Many new firms are labour-intensive, although some become more capital-intensive as they expand.

Oct/Nov 2019

Which of the following is most likely to fall under the responsibility of a central government?

Oct/Nov 2020

The diagram illustrates the way a government policy affects the market for biofuel crops in the private sector. From the diagram, which policy is used by the government, and what impact does it have on the market?

Oct/Nov 2020

Which of the following is most likely to fall under the responsibility of a central government?

Oct/Nov 2020

Which task is most likely to fall under the responsibility of a central government?

Oct/Nov 2020

Because the number of retired people has increased, demand for certain government spending has gone up. Which type of government expenditure is most likely to be affected directly?

Oct/Nov 2020

Which government policies would both narrow the gap in income between low-paid and high-paid workers?

Oct/Nov 2021

The diagram illustrates the demand for, and supply of, plastic bags. The initial equilibrium price is $P$. In what way would the introduction of a unit tax on plastic bags be represented?

Oct/Nov 2022

The Chinese government is worried about poverty levels and the need for extra resources in the country’s low-income regions. Consequently, it is raising spending in those regions and cutting it in the high-income regions. Which economic concept is shown by this government policy?

Oct/Nov 2022

The Chinese government is worried about the extent of poverty and the demand for extra resources in low-income areas of the country. Therefore, it is increasing expenditure in those areas and lowering it in high-income areas. Which economic concept is shown by this government policy?

Oct/Nov 2022

People in low-income groups do not pay income tax, yet they can still access healthcare services supplied by the state. What does this illustrate?

Oct/Nov 2023

A government plans to subsidise bus fares and raise taxes on private motoring. What effect would this have on the private cost of transport?

Oct/Nov 2024

Which function is not carried out by a government?

Oct/Nov 2025