A Level Economics AQA Practice Exam

Why might a government consider deregulation?

1. To increase bureaucratic oversight

2. To stimulate economic growth and competition

3. To promote public ownership

4. To enhance control over industries

The correct answer is: To stimulate economic growth and competition

A government might consider deregulation primarily to stimulate economic growth and competition. When regulations are reduced or eliminated, businesses often face fewer obstacles and can operate more freely. This increased freedom can lead to innovation, as companies may be more willing to explore new ideas and methods without the constraints of extensive regulations. With less regulatory burden, new businesses can enter the market more easily, fostering competition. This competition can lead to better products and services for consumers, as firms work to differentiate themselves and attract customers. Additionally, deregulation can lower costs for businesses, which may result in lower prices for consumers and increased consumer spending, further driving economic growth. The other choices reflect goals typically associated with regulatory frameworks rather than the objectives of deregulation. For example, increasing bureaucratic oversight would likely involve more regulation rather than less. Promoting public ownership is connected to government control over assets rather than deregulating them, and enhancing control over industries contrasts with the very idea of deregulation, which generally seeks to reduce government control in favor of market forces.