Question

Agreement and disagreement among economists.

Suppose that Manuel, an economist from a business school in Georgia, and Poornima, an economist from a nonprofit on the West Coast, are arguing over government bailouts. The following dialogue shows an excerpt from their debate:
Poornima: Thanks to recent financial crisis, the concept of bailouts is a hot topic for debate among everyone these days.
Manuel: Indeed, it's gotten crazy! A government bailout of severly distressed financial firms is unnecessary because free markets will properly price assets.
Poornima: I don't know about that. Without a bailout of severly distressed financial firms, the economy will experience a deep recession.
The disagreement between these economists is most likely due to a) differences in scientific judgments b) differences in perception versus reality c) differences in values.
Despite their differences, with which proposition are two economists chosen at random most liekly to agree?
a) Minimum wage laws do more to harm low-skilled workers than help them.
b) Tariffs and import quotas generally reduce economic welfare.
c) Lawyers make up an excessive percentage of elected officials.

Answer 1

a) differences in scientific judgments.

b) Tariffs and import quotas generally reduce economic welfare.

Step-by-step explanation:

Manuel is an economist who believes in classical approach of economy whereas Poornima is an economist who believes in Keynesian approach.

The Classical economics supports the idea of law and quantity theory of money. The Classical economist believes that economy is capable to achieve its natural level of real GDP by using available resources. Classical theory focuses on monetary policy to manage its money supply in an economy.

Keynesian economic theory states that government should boost demand to increase the growth. This theory believes in expansionary fiscal policy.

Manuel and Poornima disagree due to difference in their scientific judgment. They are arguing over the type of policy need to keep the economy running smoothly.

The Import and Tariffs quotas generally reduce the economic welfare. Most of the economist agrees to this proposition. Tariffs when increased then economic growth of a country slows down.