Posted in Business

Suppose that Eric, an economist from a business school in Georgia, and Ginny, an economist from a public television program, are arguing over saving incentives. The following dialogue shows an excerpt from their debate: Ginny: 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 the improvement of living standards. Eric: I think a switch from the income tax to a consumption tax would bring growth in living standards. Ginny: 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. Difference in values B. Difference in scientific judgements C. Difference in perception versus reality Despite their differences, with which proposition are two economists chosen at random most likely to agree? A. Employers should not be restricted from outsourcing work to foreign nations. B. Central banks should focus more on maintaining low unemployment than on maintaining low inflation. C. Business managers can raise profit more easily by reducing costs than by raising revenue.


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