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Bailout of Firms by Government

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Do you think the government did right to help bail out struggling firms? Should it help firms? Is there a risk for having the government bail out firms?

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The answer to this problem explains why bailouts are harmful. The references related to the answer are also included.

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The government did not do right to help bail out struggling firms. The government gave hard earned tax payers money to bail out firms that had taken on more risks to make profits. In case of some firms, even if the government had not bailed them out the firms would not have collapsed. For example, AIG would not have gone into liquidation even if the ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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