Question

When forecasting the effect of a change in economic policy, reasonable economists will get different forecasts based on slight differences in their assumptions about utility and production functions. This means that_________.

Answer 1

Answer: Economics get different forecast based on slight difference in their assumptions about utility and production functions so as to predict future economic condition

Explanation:

Economic forecasting involves the process of predicting the future condition of an economy. By getting different forecast based on slight differences, economics are able to predict future economic condition in relations to utility and production functions based on the information from different sources.

Answer 2

Answer:

Never have two economists agreed about any economic policy and its effects.

Economics is a social science that studies the best way to allocate scarce resources. In economics, every resource is scarce, even the richest person has a certain amount of money, the largest mine has a certain amount of ore and everyone lives by a 24 hour day.

Economists can carry out scientific tests on microeconomic variables, but it is impossible to do it with the whole economy (macroeconomics). There are simply billions of uncontrollable variables in an economy, so a macroeconomics study is impossible. In order to study macroeconomic variables, economists rely on past data and try to formulate theories about what would happen if X happened.

The views of economists also change radically depending on their point of views and the schools that they follow: neoclassicism vs. neo-keynesian.

I will make the same mistake as everyone else that ever studied economics and give my personal opinion, neoclassicism is useless and has never worked and it will never work. There are some good aspects of neoclassicism, like monetary control of the inflation rate, but generally speaking it deals with an imaginary world with circumstances that don't exist. Neoclassicism takes out the human element out of economics, but we live and cannot simply be eliminated from an equation because its easy to do.

On the other hand, neo-keynesian economics rely on personal expectations and more realistic circumstances, e.g. no one will ever accept a pay cut and that even applies to businesses that will not accept lowering their prices. You cannot change human nature, this school is not perfect, but at least is not as disastrous as the first. President Bush believed in neoclassicism and the Great Recession came, Presidents Obama and Trump believe in neo-keynesian economics and the economy is booming. This relationship always repeats itself.