Economics Part B

Table of Contents

Government intervention

Government intervention – What is it?

Any action taken by the government which has an effect on economic activity. Amongst the types of activity representing government intervention: imposition of taxes, supervision of prices, control of monopolies etc.

The justification for government intervention is explained by its being designed to prevent distortions resulting from market failures, or to attain national objectives such as reducing income inequality, or for initiating projects which market forces are unable to initiate on their own.