Chapter 02 Homework- EC110-Principles of Macroeconomics
Suppose that Yakov, an economist from a college in Pennsylvania, and Ana, another economist from an investigative reporting group, are both guests on a popular science podcast. The host of the podcast is facilitating their debate over government intervention. The following dialogue represents a portion of the transcript of their discussion:
Ana: The usefulness of government intervention in the economy is a long-standing issue that economists continue to debate.
Yakov: I feel that government involvement in the economy should be reduced because government programs cause more harm than good.
Ana: While I do agree that government programs can be inefficient, I really think they are necessary to help the less fortunate.
The disagreement between these economists is most likely due to______________________
Despite their differences, with which proposition are two economists chosen at random most likely to agree?
a. Employers should not be restricted from outsourcing work to foreign nations.
b. Business managers can raise profit more easily by reducing costs than by raising revenue.
c. Central banks should focus more on maintaining low unemployment than on maintaining low inflation.
Answer and Explanation
The disagreement between these economists is most likely due to differences in values .
Employers should not be restricted from outsourcing work to foreign nations.
There are two main reasons that economists tend to disagree: differences in values and differences in scientific judgments. In this case, the economists disagree due to differences in values because they disagree about a normative issue: the importance of economic efficiency versus helping needy people through public policy. In contrast, differences in scientific judgments are due to differing opinions about factual matters, e.g., the relative merits of competing theories or the values of economic parameters.
While many economic questions are open to debate, the field is largely in agreement on some points. For example, two economists chosen at random are most likely to agree that employers should not be restricted from outsourcing work to foreign nations. Indeed, one survey that 90% of economists agree with this proposition. It would be harder to find two randomly chosen economists who both agree with either of the other propositions.