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Government intervention

Solving contemporary economic issues requires government intervention. However, to demonstrate an understanding of the effect of government policies on economic issues requires an understanding of causes of these issues as well as the effects that these issues have on each other and on New Zealand society.

When students are analysing an economic issue, they also need to identify the government policies that could be used to address the economic issue and analyse their potential impacts.

Key concept indicators

Analysis of government intervention requires knowledge of government policies relating to three contemporary economic issues.

  • Describes government policies that will achieve specific policy objectives related to one contemporary economic issue, for example, economic growth policies that will achieve significant and sustainable results.
  • Uses an economic model or models to provide a detailed explanation of the direct impact of government policies on one contemporary economic issue.
  • Integrates the changes shown in economic model(s) being used to illustrate the effects of various government policies into detailed explanations of their direct impacts on a particular contemporary economic issue. For example, the student uses an aggregate demand and aggregate supply model to demonstrate the effects of a government policy that will achieve desired policy objectives and specifically refers to changes in real GDP that result from giving tax credits to firms carrying out market research to identify new niche markets for New Zealand exports.
  • Uses an economic model or models intended to provide detailed explanations of the flow-on effects of government policy objectives in relation to one economic issue in relation to two other contemporary economic issues, for example, the impact of policies designed to achieve significant and sustainable growth on international trade and the distribution of New Zealand’s income.
  • Integrates changes shown on economic models the student is using to illustrate the flow-on effects of government policies designed to achieve specific objectives into the student's detailed explanations of these effects on two other issues. For example, the student refers to the relative position of a new Lorenz curve (or to a gini co-efficient) that is being used to show the flow-on impact of reducing marginal tax rates on New Zealand’s income distribution or refers to the new quantity being exported on a supply and demand graph that is being used to show the flow-on effect of negotiating new free trade deals.
  • Justifies, by giving detailed explanations, how a combination of government policies will achieve specific policy objectives relating to one contemporary economic issue and will minimise any negative flow-on effects on two other contemporary economic issues.

Last updated May 9, 2013