Lesson 6:

The Economics of Booms and Busts

Please read chapters 22 - 23 and finish The Boom/Bust Cycle .

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1. What will be the eventual result of the tendency for land rent to grow proportionally as the economy's output increases?

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2. What happens when too much of a particular product is produced? What effect does this have on overall production?

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3. What facts show us that recessions cannot be caused by general overproduction or overconsumption?

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4. In basic terms, explain how land speculation is the root cause of recessions.

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5. What three processes contribute to restoring production after a period of recession or depression? Must these processes function concurrently?

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6. Discuss the relationship between land speculation and the banking and finance industries.

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7. What is the relationship between land speculation and inflation?

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8. Why is full employment considered to be impossible in a modern economy?

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9. How does the problem of the boom/bust cycle relate to the general problem of poverty?

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