Economic Theory

1225 WordsAug 11, 20135 Pages
Economic Theory Economic Theory Jose E Mendoza Allied American University Author Note This paper was prepared for ECN 150, Introduction to Microeconomics, Module 2 Homework Assignment taught by Nikki Follis. Part I After reading the two articles in Modules 1 and 2 related to Economic Theory (first,“How Did Economists Get It So Wrong” and second, “History of Economics Playground”), reconstruct what happened from 2006 through 2012 as it relates to microeconomic theory. Was there too much focus on the macro climate and not enough on the micro climate? Do you concur more with Krugman or Giraud? What is the basis for your opinion? Be sure to…show more content…
The failure of DGSE models to predict the crisis or to provide useful policy guidance requires a return to the basic Keynesian insight that the economy can be far away from general equilibrium for long periods. The percetions in how Krugman see the market is this offer the observation of fresh-water economists since most of the neo-Classicists were in places like Chicago and Minnesota versus the salt-water economists, located in the universities along both coasts. Market economies work on the assumption that market forces, such as supply and demand, are the best determinants of what is right for a nation's well-being. These economies rarely engage in government interventions such as price fixing, license quotas and industry subsidizations. While most developed nations today could be classified as having mixed economies, they are often said to have market economies because they allow market forces to drive most of their activities, typically engaging in government intervention only to the extent that it is needed to provide stability. Although the market economy is clearly the system of choice in today's global marketplace, there is significant debate regarding the amount of government intervention considered optimal for efficient economic operations. What I see happening in the market is the expansion of the technology, manufacturing and industry, international trade, transportation, and tourism. the
Open Document