1. What are the advantages and disadvantages of a “bailout” for an industry such as financial or automotive? Please give several examples and document any sources/data as appropriate. 2. What is your opinion about government involvement and financial support of an industry? Are there any alternative proposals/ideas that might be successful? Solution 1. Bailout package by the governement is to fill up the gap that is created by the private sector. If govt does not take such step then recession impact may increase more. Advantages: a. It helps to avert the further recession b. employment is maintained c. stability in economic sphere is maintained\\ Disadvatages: a. Increase in the govt debt may lead to sovereign debt crisis b. Govt expenditure is inflationary in nature c. Tax payers money is frittered away 2. Govt intervention is of utlmost importance but govt should not participate in the all activities without knowing the result efficiently. Govt must interven in the areas where the private sector is not incurring the expenditure and makign expenditure is important from the economy and growth perspective. Further govt also must weigh upon the negative impacts of inflation and debts.