A city government wants to reduce congestion and air pollution caused by car journeys into the city centre. It is considering either a £7 charge on each city-centre car journey or a subsidy that would reduce bus fares by 30%. Table 1 shows evidence collected before either policy is introduced.
| Measure | Value |
|---|---|
| Share of city-centre journeys made by car | 72% |
| Average bus occupancy | 54% of seats |
| Forecast fall in car journeys with £7 charge | 16% |
| Forecast fall in car journeys with bus subsidy | 11% |
| Annual cost of bus subsidy | £48 million |
Using Table 1, assess whether the car-journey charge is likely to reduce negative externalities more effectively than the bus-fare subsidy.
104 exam-style questions on AQA GCSE Economics 2.3 How the government manages the economy, covering 2.3.1a Fiscal policy and income and expenditure, 2.3.1b Fiscal policy and government objectives, 2.3.1c The government budget, 2.3.2a The meaning of monetary policy, 2.3.2b Uses of monetary policy, 2.3.3a Supply-side policies and their trade-offs, 2.3.3b Using supply-side policies, and 2.3.4 Policies to correct positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.