Additional case study: Government intervention In Germany in 2009 there was considerable debate about the extent to which the government should be intervening in the economy. For example, its citizens were worried about the future of Opel, a German car brand that was part of the ailing General Motors. Some wanted the government to make sure jobs were saved no matter what. Others, however, were more hesitant and worried about becoming the government becoming too interventionist. Traditionally since the Second World War the German government has seen itself as a referee in market issues and has avoided trying to control parts of the economy. It would regulate anti-competitive behaviour, for example, but not try to run many industries. However in the recession of 2009 when the economy was shrinking the government was forced to spend more to stimulate demand and had to intervene heavily to save the banking sector from collapse. The government also had to offer aid to businesses to keep them alive. Questions 1. What are the possible benefits of a government intervening in an economy? 2. What are the arguments against government intervention in an economy? 3. What prompted greater intervention by the German government in 2009? 4. What would determine whether the German continued to intervene on this scale in the future?

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Transcribed Image Text:10:34 O 35 O Vo) Y 4G+ l O 47% kB/s < Case Study 2.pdf Gillespie: Business Economics 2e Chapter 03 Additional case study: Government intervention In Germany in 2009 there was considerable debate about the extent to which the government should be intervening in the economy. For example, its citizens were worried about the future of Opel, a German car brand that was part of the ailing General Motors. Some wanted the government to make sure jobs were saved no matter what. Others, however, were more hesitant and worried about becoming the government becoming too interventionist. Traditionally since the Second World War the German government has seen itself as a referee in market issues and has avoided trying to control parts of the economy. It would regulate anti-competitive behaviour, for example, but not try to run many industries. However in the recession of 2009 when the economy was shrinking the government was forced to spend more to stimulate demand and had to intervene heavily to save the banking sector from collapse. The government also had to offer aid to businesses to keep them alive. Questions 1. What are the possible benefits of a government intervening in an economy? 2. What are the arguments against government intervention in an economy? 3. What prompted greater intervention by the German government in 2009? What would determine whether the German continued to intervene on this scale in the future? 4. OXFORD UNIVERSITY PRESS © Oxford University Press, 2013. All rights reserved. 1/1 Rotate screen Play Thumbnail Enter Browser II

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