24 The Role of Government

What is the general role of a government?

• to allocate scarce resources

• to improve the general welfare of its people

• to provide infrastructure such as roads

• to provide welfare benefits to low income households

What does the national government not make decisions on?

• fiscal policy measures

• funding of libraries leisure (health) centres

• monetary policy procedures

• level of infrastructure

Which level of government makes decisions about how best to achieve its macroeconomic aims?

• local

• international

• multinational

• national

Which option is most applicable to the role of international governments?

• financial support for local libraries and health centres

• the formation of a regional trading bloc

• the funding of national defence programmes

• the imposition of tariffs and quotas

Which of the following is a macroeconomic aim of the government?

• a fall in national output

• high unemployment

• imports exceeding exports

• price stability

The government pays a subsidy for each worker by a firm in an area of high employment. When would this policy be most successful in reducing unemployment?

• when the firm is capital intensive

• when the firm is labour intensive, requiring mainly unskilled labour

• when the firm provides professional services

• when the firm requires mainly specialist, skilled labour

Which of the following is not a government macroeconomic objective?

• a balance of payments deficit

• economic growth

• full employment

• price stability

A government wishes to help people with very low incomes. Which policy would achieve this?

• increasing housing subsidies

• increasing income tax

• increasing indirect taxation

• increasing inheritance tax

In 2016, output in Indonesia rose by 5%. Which of a government objectives does this meet?

• balance of payments stability

• economic growth

• full employment

• price stability

What is meant by economic growth?

• an increase in exports

• an increase in population

• an increase in real GDP

• an increase in the price level