Question

Respond to the following in a minimum of 175 words:

Can government intervention in markets sometimes make the situation worse? Provide examples in your response. For example, consider the progress of the economy of Venezuela since 2000.

Answer 1

Yes, government intervention in markets sometimes make the situation worse. Like in the case of Venezuela, the government intervention has driven to ruin the economy which was once the most prosperous country of Latin America. The country is facing hyperinflation, rapidly increasing starvation resulting in various diseases, crime and mortality rates hich further leads to emigration from the country. In 1999, Mr. Chavez became president and targeted to reduce inequality in the country in which he was quite successful but few socialist policies adopted by him backfired as a result of which many businesses stop doing production as they were not able to make profits. Then in 2013, Nicolas Maduru became president under whose dictatorship global oil prices increases due to which the economy of Venezula fall. Also there was shortage of supply of basic necessities which was the result of mismanagement of governance. From years, the country is going with lack of investment in infrastructure which was also due to irrelevant government intervention. Therefore, Venezuela is the best example to understand that government intervention in markets sometimes make the situation worse.