Our next question deals with the proper role of government
in managing the macro economy.
Mr. Ricardo, if a recession hits what should the government do to fix it?
>> Our government simply needs to be patient.
If we prudently wait,
market forces will certainly bring the economy back to full employment.
>> Prime Minister Caines, what's wrong with waiting for the market to adjust?
After all, we are a free market economy.
>> Sir, it is simply bad advice.
Absent government intervention, the recession will only deepen as incomes and
production fall and unemployment rises.
>> I would remind my liberal opponent that a government big enough to give you
everything you want is a government big enough to take all you have.
>> And I would remind my conservative opponent that,
in the long run we are all dead.
So waiting for a recession to end is simply foolish.
>> Well, at least the voters will have a clear choice in this election.
>> Professor Navarro here, and welcome back to The Power of Macroeconomics.
In this lesson, I'm going to introduce you to one of the most important analytical
tools in macroeconomics, the aggregate supply, aggregate demand framework.
