Essay_of_Macro_Economics

ECO 260 Booms and Busts In this video Men where out of work. So they asked the question what makes economy so unstable. Before WWII they had no ideal. The first theory was that the system was self-correcting. In the early 20th century businessmen still clung to a theory called Says Law which said that when they produced a commodity they automatically created a demand for that product. Jobs where still falling. It was feeling like Says had said too much. The main point of view seemed to be that the business cycle was correcting an imbalance and that by intervening you might only make things worse. Karl Marx was the first economist to conceive of a self generated cycle in which good times produced eventual bad times and the bad times produced good times. During the times of economic depression, Marx’s followers were quick to point out the failure of Capitalism. Later the video talked about the Great Depression, how President Hoover depended of the advice held by both reputable economists and government officials at that time. That theory held that a hands off approach to the economy was the best medicine. Over and over again Hoover would say that "Recovery is just around the corner". And leading economists of the era believed that the price system would make the necessary adjustments. If things were going well people would make profits, and if they weren’t they wouldn’t make profits and that would help in the adjusting process. I some times feel that we as an economy don’t really learn from the mistakes we make. I say this because it is like a viscous cycle.1