This Exercise Will Show You How Different Theories (Models) Can

question 22

Essay

This exercise will show you how different theories (models) can lead to very different courses of action. Suppose we ask the following question: Does income inequality promote economic growth and society's overall prosperity? Suppose two economists come up with the following theories (models):
Economist A believes that wealth accumulation in just a few hands increases savings because consumption is necessarily limited. Higher savings, in turn, allow investing in new production facilities that increase the country's overall income and everybody is better off. So, Economist A advocates a non-equalitarian society.
Economist B thinks that a very unequal distribution of wealth will increase capacities of production beyond the purchasing power of an essentially poor mass of consumers. For a while, consumers will increase their consumption, and prosperity, by borrowing from the rich, but eventually they will not be able to repay their debts and the economy will collapse for lack of demand. At that point, investing in new production facilities becomes unnecessary. In conclusion, Economist B thinks that extreme income inequality is counterproductive.
a. What are the policy implications of the two theories? (In other words, does it matter which theory is correct?)
b. How would a scientist determine which theory is correct?
c. Under what conditions would each of the two models be correct? Could one use both models under different circumstances?

Appreciate the variability and complexity of human sexual behavior and orientations.

Recognize the psychological impact of societal norms on gender and sexual identity.

Identify factors contributing to gender differences in mental health and behavior.

Understand the differences and similarities in how men and women experience and perceive friendships.

---

Definitions:

Firm Handshake

A strong and confident handshake, often interpreted as a sign of reliability and confidence.

"Who are your people?"

A colloquial question aiming to understand someone's social, ethnic, or familial background.

Disharmony with Nature

A state or situation in which there is a lack of balance or disconnect between humans and the natural environment, often leading to ecological degradation or loss of biodiversity.

Legal Mandate

An authoritative command or instruction, often given by a legal body or law, which mandates a certain action or behavior.