ECONOMY

Question 2

WHAT IS ADAM SMITH’S INVISIBLE HAND?

Answer 2

INDIVIDUAL PURSUIT OF SELF INTERESTS IN A FREE MARKET CAN UNINTENTIONALLY ALLOCATE RESOUCES EFFICIENTYLY AND LEAD TO OUTCOMES THAT BENEFIT SOCIETY AS A WHOLE. CLASSICAL LIBERALS USE THIS ARGUMENT TO ADVOCATE FOR A LAISSEZ-FAIRE GOVT.

Question 3

HOW HAVE KEYNESIANS CHALLENGED LAISSEZ-FAIRE POLICIES?

Answer 3

GREAT DEPRESSION DISCREDITS FREE MARKET ECONOMICS AS THE FREE MARKET FAILED TO GOLT STOCK MARKET CRASHES. EXPLAINED BY THE PARADOX OF THRIFT.

Question 4

WHAT IS THE PARADOX OF THRIFT?

Answer 4

DURING A DOWNTURN, PEOPLE RATIONALLY SAVE AS THEY R WORRRIED ABOUT THE FUTURE BUT WHAT IS RATIONAL FOR 1 IS DANGEROUS IF EVERY1 DOES IT AS AD FALLS SO HIGH UNEMPLOYMENT AND RECESSIONS OCCUR.

Question 5

HOW DO LIBERALS AGREE ON THE ECONOMY?

Answer 5

1. BELIEF IN FREE MARKETS/CAPITALISM

Question 6

HOW DO LIBERALS DISAGREE ON THE ECONOMY?

Answer 6

1. BELIEF IN A WELFARE STATE
2. LAISSEZ FAIRE CAPITALISM VS KEYNESIANISM