12.8 Government Influence in the Economy

Draw

Looking carefully at this list of responsibilities, which ones do you think the government should be providing or a private company should be providing?

Remember: This is totally your opinion!

Multiple Choice

What is a market failure?

• A situation where the free market does not allocate goods and services efficiently

• A situation where the government controls all businesses

• A situation where only private companies provide services

• A situation where there is no competition in the market

Multiple Select

Which of the following are examples of the government correcting market failures? (Choose the 2 correct answers)

• selling federal land to an oil company

• outlawing the use of a toxic material in toys

• setting rules limiting how much a factory can pollute

• making a loan to a struggling business

Multiple Choice

Why does the government fight against monopolies?

• To protect large businesses from failing

• To increase corporate tax revenue

• To prevent unreasonably high prices and support market competition

• To reduce the number of companies in the market

Multiple Choice

Which of the following best describes the concept of 'laissez-faire' in economic policy?

• The government should stay out of the economy.

• The government should regulate all businesses.

• The government should control prices.

• The government should provide all goods and services.

Multiple Choice

Which of the following is NOT a function of the government in the economy?

• Establish and enforce private property rights

• Deal with external costs and benefits

• Promote economic security

• Increase private monopolies

Open Ended

Summarize one way the government can intervene in economic activity to address market failures, based on what you learned in this lesson.