economic role of govt (1)

What are the three levels of government in Australia?

Commonwealth Government, State/Territory Governments, and Local Governments.

What is fiscal policy?

The use of government spending and taxation to influence economic activity.

What is a modified market economy?

An economy where markets allocate most resources but the government intervenes to improve outcomes.

What are the four economic roles of government?

Provide public goods and services; regulate businesses; reduce income inequality; stabilise the business cycle.

What are public goods?

Goods and services that are non-rival and non-excludable, such as defence.

What is market failure?

When markets fail to allocate resources efficiently.

What are externalities?

Costs or benefits affecting third parties not involved in a transaction.

Why does government intervene in markets? (my pet is smart)

To correct market failure, provide public goods, reduce inequality and promote economic stability.