~WRL1908 - : As Paul Krugman put it, The state of macro, in...

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Nick Woolf Honors Micro Economics September 23, 2009 Mrs. Harvey Where Economists Went Wrong An economist is defined as a student or expert in the field of economics. In Paul Krugman’s article in the New York Times, “How Did Economists Get It So Wrong,” Krugman criticizes economists for blinding themselves with the notion that free market economies are, essentially, perfect, and that although minor problems may occur, the Federal government prevents any large-scale catastrophes from transpiring. Instead of preparing for possible problems, economists created theoretical models that failed to account for real-world fundamentals, such as the fact that people act irrationally and unpredictably. QUOTE ON PAGE 14 FIRST PARAGRAPH Closing
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Unformatted text preview: : As Paul Krugman put it, The state of macro, in short, is not good. Given the current financial crisis our nation is in, it has become clear that the economy is in terrible shape. Economists, for the most part, neglected to consider the possibility of a disastrous market failure, and thus were unprepared to cope with the problems that have recently ensued. Although how we got to this point and who exactly should be blamed for the collapse still remains up in the air, one thing is certain: we need guidance. President Obamas stimulus package, the American Recovery and Reinvestment Plan, is supposed to create jobs and stimulate economic growth, but is it really working? Will our economy actually...
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