Question

How an economist thinks that the economy works-is it self-regulating or not? - influences his opinion of the role government should play in trying to stabilize the economy. Do you agree or disagree? Explain your answer.

Short answer

Yes, an economist's opinion on whether an economy is self-regulating or not would indeed influence their views on the role of government in the economy. This is because their belief about the natural equilibrium of market forces would affect their stance on government intervention policies. However, it's essential to consider other factors such as globalization, technological advances, socio-economic occurrences, and historical data while deciding the necessity of governmental roles in an economy.

Step-by-step solution

Understanding the concept of a self-regulating economy

One must understand that in a self-regulating economy market forces such as supply and demand are assumed to naturally bring the economy to equilibrium. In this model, there's little to no need for government intervention.

Assessing the role of government in an economy

Contrarily, the role of the government in the economy is an important factor to consider. Some economic theories, such as Keynesian Economics, promote active government intervention to stabilize the economy, especially during recessions.

Forming an opinion

Based on this information, form an opinion considering different economic theories and historical examples of economic situations. It is important to support your claim with solid reasoning and evidence.

Explanation

Lastly, effectively communicate your opinion with a clear explanation. Discuss why you agree or disagree with the notion that the economist's belief about the workings of the economy influences their views on governmental roles in regulating the economy.