Question

Do you think that government intervention is needed to correct recurrent fluctuations of the business cycle or should the market be left to correct itself? Why?

Answer 1

I think the government should intervene in the market to correct the fluctuations of the business cycle. If the market is left to correct fluctuations in itself, the recovery can be time-consuming and involve huge economic costs. The government can timely intervene in the market and conduct expansionary policies in order to stimulate the economy. The government actions can create a multiplier effect in the market and quicken the economic recovery. This will help people avoid economic hardships which they would have to bear in case the market is left to correct on its own. Therefore, government intervention can reduce the span of the economic crisis as well as its severity.