Most economists believe that exchange
a. is likely to be mutually advantageous to both parties when it is voluntary
b. only takes place when one side can extract a profit from the other
c. usually makes both parties worse off
d. is best when strictly regulated by the gov't

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Chika IlonahLv10

2 Nov 2020

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Two economists agree that labor market discrimination against certain workers unfairly leads to lower wages for the disfavored group. Economist X argues that government intervention is most likely necessary to eliminate this unfair treatment, whereas Economist York argues that the best solution to the unfair treatment is to let the market work to eliminate it on its own.

Economist Y is most likely to be correct when labor and product markets are highly competitive and the lower wages of the disfavored group result from:

A. Differences in human capital
B. Statistical discrimination
C. Discrimination by employers.

pucemink481

Are you a Classical or Keynesian economist? Pick a perspective and defend. I will admit that I am a bit of a Classical economist that believes the Keynesian model has a place as well. I do not believe that I can commit to one side fully, over the other, but if I must I would side with the Keynesian model. It seems to me they both have a place in the understanding of economics, one more in the short run and the other in the long run. The Keynesian economists believe that the economy is not always at full employment and can be either below or above its potential, this is a big point of emphasis in my opinion. Seeing first hand some of the impacts of the recession in 2008 helped me to understand this perspective and side with Keynesian over the Classical. I believe that while the Classical model gauges the economy correctly in the long run, with its assessment that the economy will sort itself out without government interference in a recession for example, but it does not account for situations in the short run. It may be true that eventually the economy will return to normal following a recession, but often I believe citizens do not have the ability or resources to wait for the self-correction of the economy and need immediate assistance. After reading this post, do you agree or disagree? why?

Question is this -How government intervenes in the economy from three perspectives: Fiscal, Monetary, and Supply Side efforts. You have also now looked at the criticisms of government involvement from the Classical perspective. Which approach makes the most sense to you?

Comment on this answer...

This is Answer-After learning about the classical economic viewpoint and the criticisms of government from it, I don't think there is one single approach that makes the most sense to me between fiscal, monetary, and supply-side policies. I think a minimal mix of the three is okay, and for each, they have their own given situations where they may work best in comparison to the others, or even work in conjunction with one another.

Increasing aggregate demand through fiscal policy may help the economy with unemployment and price levels, or it may hurt the economy instead and leave it in a worse state than it was previously found to be at. This could create artificial demand where there isn't true demand from the consumers. This could trick business and mess them up.

Controlling the supply of money through monetary policy may be helpful to the economy for taming inflation and keeping price stability. Controlling it too much could cause problems such as market unpredictability, which in turn could cause mixed results such as to scare people away or draw them into borrowing less or more money.

Increasing supply through supply-side policies may help the economy with unemployment and price levels. It could hurt people in ways such as people not receiving federal funding, or receive less of it (budget cuts in whatever that may be) due to tax cuts, exemptions, etc., from the government to businesses.

With these three perspectives in mind, I would prefer to see a more classical approach to economic situations. The perspectives of fiscal, monetary, and supply-side policy I think can each be helpful but would be best if they didn't have to be implemented in the first place. They have the potential to cause damage to the economy. After watching the classical economics video and reading the chapter, one thing that stood out to me and I think summarizes government involvement from a classical economists viewpoint is the government's role is like being the umpire in a baseball game. They should make sure everyone plays by the rules and only enters the game as a last resort. That approach makes sense to me.