Why was the government effective in achieving its purpose

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Question 1) Information is the basis for our economic and financial decisions. As buyers, we collect information about products before entering into a transaction. This is information that sellers typically possess but buyers do not. Economists use the term adverse selection to describe the problem of distinguishing a good feature from a bad feature when one party to a transaction has more information than the other party. One industry where adverse selection is most apparent: used cars. Your task: make a list and discuss at least three hidden attributes of the vehicles for sale.

Question 2) To mitigate the economic devastation created by COVID-19, the government implemented the CARES Act. Its purpose was to provide individuals with a combination of increased unemployment benefits for those out of work and cash payments to all Americans up to an income cap.

a) Was the government effective in achieving its purpose? Why or why not?

b) Many workers decided to take the government supplement and not return to work. What has this done to the economy?

c) What, if any, did these actions have on inflation?

d) Is government wage subsidy an idea supported by capitalism, socialism or communism? Explain your answer.

Reference no: EM133336620

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