The Following Notice Appeared on a Full Page of the Wall

question 75

Essay

The following notice appeared on a full page of the Wall Street Journal on February 9, 2009:
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"There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy."-U.S. President-Elect Barack Obama, January 9, 2009
With all due respect, Mr. President, that is not true. Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More U.S. government spending by Presidents Hoover and Roosevelt did not pull the United States out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the United States today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.
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The statement was signed by more than 200 economists, including 3 Nobel Laureates.
a.Comment on the extent to which the disagreement between the U.S. president and the economists involves a disagreement about whether policy should be passive or active.
b.Identify the rationale(s) used to support the economists' position.​​

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Definitions:

Complementary to Labor

Refers to technology or tools that enhance the productivity of workers, increasing output.

Rapidly Declining Occupations

Jobs or professions experiencing a significant decrease in demand, often due to technological advancements, economic shifts, or changes in consumer preferences.

Output Effect

The output effect is the change in total revenue resulting from selling additional units of a product, considering the impact on price due to supply and demand.

Elastic Demand

A condition where the quantity demanded of a good or service is highly responsive to changes in its price.