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In order to gain insight into the current and future state of an economy, many economists hold that it is helpful to get the view on this from consumers and businesspersons. Randomly selected consumers and businesspersons are asked to provide their views about the current and the future state of the economy. Thus if the majority of those surveyed

In his attempt at explaining what business cycles are all about, Milton Friedman held that the economy’s output is bumping along the ceiling of maximum feasible output except that every now and then it is plucked down by a cyclical contraction. He attributed this contraction to various shocks. He was of the view that economic contractions involve

In his “Philosophical Origins of Austrian Economics” ( Mises Daily , June 17, 2006), David Gordon writes that Eugen von Böhm-Bawerk  maintained that concepts employed in economics must originate from reality—they need to be traced to their ultimate source in the real world. If one cannot trace it, the concept should be rejected as meaningless.

Most commentators’ regard savings as harmful to economic growth on the ground that savings are associated with fewer outlays. These commentators portray economic activity as a circular flow of money. Spending by one individual becomes part of the earnings of another individual, and spending by another individual becomes part of the first

To maintain his life and well-being, an individual must have at his disposal an adequate amount of consumer goods. These goods, however, are not readily available. Without tools at his disposal and by means of his bare hands, the individual can only obtain from nature very few goods for his survival. For instance, take an individual John, stranded

It is common for commentators and economists to refer to something called the “economy,” which sometimes performs well and at other times poorly. The “economy” is presented as a living entity apart from individuals. For example, various experts report that the “economy” grew by such and such percentage, or that the widening in the trade deficit

Why do individuals pay higher prices for some goods than others? The common reply references laws of supply and demand, but what are these laws? The answer is found in the law of diminishing marginal utility. Most economists explain this law by describing the satisfaction one derives from consuming a good such as an ice cream cone. The

Many economists believe that economics must emulate the physical sciences with controlled experiments to be credible. Econometric models, they claim, can fulfill the role of laboratory experiments. Through mathematical and statistical methods, an economist supposedly establishes relationships between various economic variables. For example,

To explain Japan’s economic problems, Paul Krugman employed a model that assumes people are identical and live forever. While admitting that the model is not realistic, Krugman nonetheless argued that his model could still offer solutions to the crisis. In The Philosophical Origins of Austrian Economics , David Gordon wrote that Eugen von

The yearly growth rate of the consumer price index jumped from 5.4 percent in June 2021 to 9.1 percent in June 2022. Some economists attributed this increase to monopolies. According to Business Insider, economists at the Federal Reserve Bank of Boston have  claimed that monopolies help keep the prices of goods and services high. Most economists