Lecture Two (1 - 50)

Question 1

what did Keynes think about economic models?

Answer 1

argued that the assumptions they had were not backed by sound reasoning and said “it’s better to be roughly right than precisely wrong”

Question 2

what happens when the efficient market hypothesis fails? (in the context of schumpeter’s flow)

Answer 2

when investors don’t trust the entrepreneurs or feel they’re not getting fair value for the price they’re paying then the circular flow doesn’t work

… this makes stock market inefficiency socially costly