CAIE A-Level Economics 10.3.3 Macroeconomic Government Failure

CAIE A-Level Economics 10.3.3 Macroeconomic Government Failure
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise assessing macroeconomic government failure by comparing intended objectives with unintended output, efficiency or migration effects and testing causal evidence.

How this is tested

  • identify government failure when policy costs or unintended effects exceed the intended macro benefit
  • use article evidence to separate government-caused outcomes from external shocks and weak attribution
  • apply tax-induced skilled emigration as an efficiency loss that undermines the original objective

Question 29

[Maximum number: 1]

A government wishes to increase economic efficiency in the country. It raises the rate of income tax which leads to the emigration of high-earning skilled workers that the country needs.

How would this outcome be described?

government
failure

market failure

negative
externality

no

no

yes

no

yes

no

yes

yes

no

yes

no

no