Question

Suppose that Larry, an economist from a research institute in Texas, and Megan, an economist from a public television program, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:

Megan: I think it’s safe to say that, in general, the savings rate of households in today’s economy is much lower than it really needs to be to sustain an improvement in living standards.

Larry: I think a switch from the income tax to a consumption tax would bring growth in living standards.

Megan: You really think households would change their saving behavior enough in response to this to make a difference? Because I don’t.

The disagreement between these economists is most likely due to:

a) Differences in scientific judgement

b) Differences between perception vs reality

c) Differences in value

Despite their differences, with which proposition are two economists chosen at random most likely to agree?

a) Business managers can raise profit more easily by reducing costs than by raising revenue.

b) Employers should not be restricted from outsourcing work to foreign nations.

c) Central banks should focus more on maintaining low unemployment than on maintaining low inflation.

Answer 1

Answer 1 : The disagreement between these economics is most likely due to differences in scientific judgement. As larry said that to switch out income tax to consumpation tax believed there change should be encouraged savings because now income has been saved not be taxed. Higher savings lead to more rapid economic growth and increasing standard of living. But megan does not believe that reducing tax rates changes saving behaviour.

Answer 2 : Despite these differences, the proposition are two economist choosen random mostly likely to agree that Employers should not be restricted from outsourcing work to forgien nations because here most of the economist agree with proposition as this help to increase country growth. As outsourcing may lead to higher profit for employer which in turn increased GDP of the country.