Suggested Answers of BT2 Revision Package - ASKnLearn

with the large amount of subsidies offered and the funds would bedirected away from other development projects which can raiseproductive capacity and contribute to the economy’s growth. The rightamount of subsidies to increase the consumption of housing to theoptimal level is often difficult to ascertain. There is also the concern thatachieving a high level of home ownership might mean that people arecommitting large proportion of their savings to housing resulting in thepossibility of insufficient liquidity for old age needs.Therefore, regular review of government housing policies to ensure thatcosts and benefits of government intervention must be appropriatelybalanced. It is important for the government to watch the housing marketand to act judiciously so as not to allow booms and busts in the marketas instability in this market can affect the economy and the variousincome groups.L1L2L3Statements of microeconomic goals and descriptiveanswer on either the general reasons for or the measuresof government intervention without directly addressing thequestionClear explanation of market failure and rationale forgovernment intervention to achieve allocative efficiencyand equity. Some attempt to evaluate government actions.Thorough explanation on government intervention in thehousing market to achieve allocative efficiency and equityand evaluation of the actions. Answer arrives at a clearand reasoned conclusion.1-34-67-8