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Micro economics individual project - Essay Example

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Due to the credit crunch which emerged in late 2007, not only the financial sector of the country suffered but also other sectors most notably the auto industry…
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Micro economics individual project
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Micro economics individual project

Download file to see previous pages... This article published in New York Times on October 13, 2011 is titled as “Auto Bailout Done, Obama Looks for Payback” and has been written by Jeff Zelney.1 Though this article discusses mostly the political side of the Obama Administration and its plans to win the next election however, it critically links as to this has important economic implications too.
After 2007’s recession, two industries were badly affected i.e. the financial services sector as well as the auto industry. US government offered bail out plan to some of the largest automakers in the country in order to make the industry survive the current wave of economic depression. Most notable beneficiaries of the Federal funding included General Motors as well as Chrysler. By allowing these organizations to have equity support, government actually attempted to correct the demand and supply balance within the auto industry.
After receiving support from the government, auto sector responded through downsizing, cutting costs as well as improving their processes. It has been mentioned that the auto industry specially the bigger players in the market are responding to the situation and are slowly coming out of the recessionary conditions. This article therefore clearly mentions that with the help of the government intervention, industry survived one of the most difficult periods in its history.
This article therefore clearly establishes the conditions in two different periods and how the government intervention can actually help organizations to correct the supply and demand mechanics within a free market economy.
In order to reduce the market anomalies as well as lessen the impact of externalities, it is important that the government must intervene in the market. The timely intervention of the government in the market affairs therefore can gradually help the markets to ...Download file to see next pagesRead More
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