Professional Documents
Culture Documents
- There’s interplay between theory and observation that occurs in the field of
economics.
- An economist might live in a country experiencing rapidly increasing prices
and be moved by this observation to develop a theory of inflation.
- The theory asserts that high inflation arises when the gov. prints too much
money.
- To test the theory, the economist would collect and analyze data on prices
and money from many different countries.
- If growth in the quantity of money were not at all related to the rate at which
prices are rising, the economist would start to doubt the validity of the
theory of inflation.
- If money growth and inflation were strongly correlated in international data,
he would believe the theory.
Economic Models
Economists in Washington
- Economists’ advice isn’t always straightforward.
- Economists are aware that trade-offs are involved in most policy decisions.
- A policy might increase efficiency at the cost of equality.
- President gets advice from Council of Economic Advisers, made of 3
members and a staff of several dozen economists.
- They advise the pres. And write the annual Economic Report of the Pres.,
which discusses recent developments in the economy and present the
council’s analysis of current policy issues.
- Economists @Dept. of Treasury help design tax policy.
- Economists @Dept. of Labor analyze data on workers and those looking for
work to help formulate labor-market policies.
- Economists @ Dept. of Justice help enforce antitrust laws.
- To get independent evaluations of policy proposals, Congress relies on
economists in Congressional Budget Office.
- The Fed. Reserve, the institution that sets the nation monetary policy, has
100s of economists who analyze economic developments in U.S and world.
Differences in Values
- Economists give conflicting advice because they have diff. in values.