Practice mode Application of Economics

Two economists are debating unemployment policy. The first says the government could cut unemployment by one percentage point by raising government spending by 50 billion dollars. The second replies that an extra 50 billion dollars would cut unemployment by only one tenth of one percent, and only temporarily. Why do these economists disagree?

Correct answer A. They disagree because they have different scientific judgements

Explanation

They disagree about how the economy actually works, namely the size and duration of the spending effect, which is a difference in positive, testable scientific judgement rather than in values.

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