Market Interventions and their Economic Implications Quiz

Sets a minimum price for labor, ensuring workers are paid above a certain threshold.

Intended to protect domestic industries by making imported goods more expensive.

Government payment to businesses aims to lower their costs and encourage production.

Taxation falls under fiscal policy, while monetary policy typically involves actions by the central bank.

Tax cuts aim to boost consumer spending, increasing demand for goods and services.

Government increases spending and reduces taxes to stimulate economic growth.

Limits set on the quantity of goods allowed to be imported or exported.

Aims to correct externalities by controlling harmful emissions without directly affecting prices.

Prices adjust based on supply and demand, guiding producers and consumers in resource allocation.

Restricts imports, encouraging domestic producers to fill the gap in supply.

Government spending on infrastructure creates jobs and stimulates economic activity.

Firms must accept the market price set by supply and demand.

Government-imposed limit on how high prices can go, intended to protect consumers.

A market with only one seller, allowing it to set prices without competition.

Adam Smith's notion that self-interested actions lead to overall economic benefit without centralized direction.

One firm dominates the market, enabling it to set prices and control output.

While government aims to promote efficiency and equity, maximizing producer surplus is not a primary goal.

Central bank reduces the interest rate at which banks borrow, stimulating lending and economic activity.

A market structure characterized by a small number of large firms with significant market power.