Question

aplia - chapters 1&2
antonio: indeed, its gotten crazy! a government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets.
caroline: i dont know about that. without a bailout of severely distressed financial firms, the economy will experience a deep recession.
the disagreement between these economists is most likely due to
despite their differences, with which proposition are two economists chosen at random most likely to agree?
○ business managers can raise profit more easily by reducing costs than by raising revenue.
○ central banks should focus more on maintaining low unemployment than on maintaining low inflation.
○ employers should not be restricted from outsourcing work to foreign nations.

Explanation:

1. For the first blank: Antonio's view aligns with the belief in free market efficiency (minimal government intervention), while Caroline emphasizes the potential macroeconomic harm of not intervening. This disagreement stems from differing views on the role of government in markets and whether free markets can self-correct without intervention.
2. For the multiple-choice question:

• The first option about cost-cutting vs revenue-raising is a firm-specific operational choice, not a consensus economic proposition.
• The second option about central bank priorities (unemployment vs inflation) is a major point of disagreement between different economic schools (e.g., Keynesian vs monetarist).
• The third option about unrestricted outsourcing aligns with the broad consensus among economists that free trade and global resource allocation (including labor outsourcing) leads to overall economic efficiency, even if there are distributional costs.

Answer:

The disagreement between these economists is most likely due to differing views on government intervention in markets / the efficiency of unregulated free markets

For the proposition question:
O Employers should not be restricted from outsourcing work to foreign nations.