Beruflich Dokumente
Kultur Dokumente
ACTIVITY C2-1
C2a7 H, R
Professor Smyth: Well, Professor Lukas, I have finally heard from someone who understands
how the economy really works. I cannot agree with our colleagues who give government and
the central bank such active roles in determining the health of the economy. Although
inadequate demand and recessions might be experienced in the short run, the economy is selfregulating. Wages, prices, and interest rates are flexible, allowing markets to clear if you
given them enough time. In other words, the economy will adjust itself to the full
employment level because supply creates its own demand. Policy interventions cannot
change the real level of economic activity, although they may affect the price level. Except
for national defense and market failures, the proper role of government should be minimal,
and the economy must be free to operate on its own.
Ladies and gentlemen, thats all the time we have. Lets give our distinguished panel a round
of applause.
Analyze your assigned professors comments from Activity C2-1, using the
following format:
Name of professor: _______________________
What is the problem that the professor has identified in the economy? _______________
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What is the professors major point or policy regarding this problem? _______________
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What time period is being used in this analysis? _________________________________
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What assumptions has the professor made in the analysis of the economy? ___________
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What theory does he use to support his proposal? _______________________________
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What values or goals does the professor support?
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What evidence can you identify in the reading that illustrates these values?
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