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Week9disiscussion section

Week9disiscussion section - Economics 21 Week 9 Discussion...

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Economics 21 Spring 2008 Week 9: Discussion  Section These questions relate to an article by Paul Krugman  which appeared  in “The Dismal  Science” 8/13/98  and  which you can find on BB.  It is a great, great, article from a time  when  Paul Krugman  was writing  mostly about  economics, before the Bush  Administration  drove him crazy. 1) Why did  the babysitting  co-op fall into recession and  how  was the recession ended? Script supply  was too small causing  AD for sitters to be lower. People saving script so  people can’t earn more script(unemployment) All acting rational but still ending  in a  recession. It was ended  by allowing  people to borrow  scripts they issued  more scripts  out. Not enough  coupons. Everyone wanted  to save coupons  and  babysit so noone  could  hire themselves out as babysitters. Saving is good  for the future and  bad  for the 
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