Which of the following occurs if government intervention forces the economy inside the production possibilities curve?

Question

Quizplus · Accepted Answer

Government intervention that forces the economy inside the production possibilities curve can lead to government failure. This occurs when the government's intervention results in a more inefficient allocation of resources than if it had not intervened at all, leading to a decrease in economic welfare. Market failure occurs when the market fails to allocate resources efficiently, externalities refer to unintended side effects of economic activities, and income inequality refers to a distributional issue in the economy. None of these directly apply to the question.

Which of the Following Occurs If Government Intervention Forces the Economy