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Cash For Clunkers Program Analysis

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Cash For Clunkers Program Analysis
According to Adam Smith’s economic philosophy, the “invisible hand” is the intangible force behind the market decisions made by households and firms that ultimately “…leads them to desirable market outcomes (Mankiw, 2012, p.11). Based on this idea, the invisible hand is led by the ebb and flows of prices in a market economy and usually acts best on its own—without government involvement. President Obama’s “Cash for Clunkers” program was an attempt for the government to stimulate the economy following the financial crisis in 2008 by incentivizing consumers to buy new fuel-efficient cars while trading in their old ones. The program supported the invisible hand in that it did influence some people to buy new cars which supported automobile sellers.
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