Unit 4b 0.0 / 5 ? Business Studies & EconomicsUnit 4bA2/A-levelEdexcel Created by: Luke HetheringtonCreated on: 20-06-16 12:40 Situations where free market forces have led to an inefficient allocation of resources. Market Failure 1 of 8 Explains how an increase in spending has a greater impact on the economy than the initial amount spent. The Multiplier Effect 2 of 8 Uses interest rates to vary the costs of borrowing and influence the level on consumption, interest and aggregate demand. Monetary Policy 3 of 8 Involves changes in taxation, government expenditure and public borrowing. Fiscal Policy 4 of 8 Reduce the demand for domestically produced goods and services by diverting part of people’s incomes into savings, taxes. Leakages 5 of 8 What people earn from wages, dividends, interest and rates if owning property. Income 6 of 8 Socially desirable; underproduced if left to the free market; customers will be unwilling to pay private costs; e.g. healthcare, education. Merit Goods 7 of 8 People who are willing and able to work but cannot find a job. Unemployment 8 of 8
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