Th4.5: ^^ Living Standards

Question 1

How can the government improve social welfare?

Answer 1

by correcting market failure and providing public goods

Question 2

How does the government reduce poverty?

Answer 2

by providing benefits and basic goods, such as education and healthcare

Question 3

How can the government negatively affect living standards?

Answer 3

by providing goods and services inefficiently, meaning overall output is reduced

Question 4

What does the government suffer from that can also worsen living standards?

Answer 4

the principal agent problem