In late$2012,$ the U$.$S$.$ Treasury sold the last of the stock it purchased in the insurance company AIG. The Treasury earned a profit on the$$$$22\mathrm{.}7$ billion it had invested in AIG in $2008.$ An article in Wall Street Journal noted$$that:

$"$This step in$$AIG$\text{'}$s turnaround, which essentially closes the book on one of the most controversial bailouts of the financial$$crisis$,$ seemed nearly unattainable in$2008,$ when the$$insurer$\text{'}$s imminent collapse sent shockwaves through the global$$economy$."$

$.$

$$Source: Jeffrey Sparshott and Erik$$Holm$,$ "End of a$$Bailout: U$.$S$.$ Sells Last AIG$$Shares$,"$ New York

Times$,$

December$11,$

$2012.$

The federal government bailed out AIG because

A$.$

the Federal Reserve insisted that this was the best course of action.

B$.$

AIG promised to help bail out other companies if they needed it$.$

C$.$

it was the largest insurance company in the nation and the government feared the repercussions of a failure of AIG.

D$.$

it was a$$government$-$subsidized insurance company so they were obligated to bail the company out.

Part $2$

The government bailout was controversial because

A$.$

it was$$expensive$,$ and other companies suffered through bankruptcy and failure.

B$.$

the bailout caused income tax rates to rise.

C$.$

the Federal Reserve excerised powers that it rarely uses.

D$.$

AIG got off the hook with no consequences.

Part $3$

Even though

the

federal government earned a profit on its investment in$$AIG$,$ economists and policymakers who opposed the bailout were

A$.$

not necessarily wrong because taxes rose as a result.

B$.$

not necessarily$$wrong$,$ because it was an expensive and risky solution.

C$.$

wrong because it turned out to be a good investment.

D$.$

wrong because it is the proper role of government to bailout businesses about to go bankrupt.