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AQA AS Micro-Economics > Government Failure > Flashcards

Flashcards in Government Failure Deck (4)
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1
Q

Government failure

A

Policies that cause a deeper market failure. Government failure may range from the trivial, when intervention is merely ineffective, to cases where intervention produces new and more serious problems that did not exist before.

2
Q

Net welfare loss

A

An overall loss of economic welfare when compared to the starting position.

3
Q

Regulatory capture

A

A form of government failure, happens when a government agency operates in favour of producers rather than consumers.

4
Q

Unintended consequences

A

A cause of government failure whereby the government’s actions result in unexpected effects. For example, in the 1960s the government cut spending on railway infrastructure and built roads instead. This caused a significant rise in car transport, which in turn has led to a rise in the demand for trains because the roads are so congested.