Economists are always concerned with the concept of moral hazard
Economists are always concerned with the concept of moral hazard– lack of incentive to guard against risk where one is protected from its consequences. Some have argued that bailouts of anyone is improper as it only creates additional problems as people/ companies/ industries never learn to plan and save for downturns in the economy. Some have to fail in order to learn valuable lessons. Others have argued that some economic conditions require bailouts due to systemic risk– the possibility of the collapse of the whole economy based upon the collapse of individual components.
As the federal government and the Federal Reserve are debating fiscal and monetary policy in response to the coronavirus, provide a 2-3 page opinion on whether or not government should provide bailouts to individuals or companies?
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