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Economics (AS & A Level) · Feb / March 2022 · Paper 32 · Question 13

9708Methods and effects of government intervention in markets

A government wishes to reduce the negative externalities caused by the use of coal. Which policy should the government use?

  1. AImpose an indirect tax on the production of hydroelectric power.
  2. BIncrease income tax.
  3. CRemove any restrictions on coal production.
  4. DSubsidise wind-powered electricity production.

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Correct answer: D. Subsidise wind-powered electricity production.

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