Lesson 6: The Economics of Booms and Busts

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

1. What will be the eventual result of the tendency for land rent to grow proportionally as the economy's output increases? (chapter 22)
 


2. What happens when too much of a particular product is produced? What effect does this have on overall production? (chapter 22) 



3. What facts show us that recessions cannot be caused by general overproduction or overconsumption?  (chapter 22)



4. In basic terms, explain how land speculation is the root cause of recessions.  (chapter 22; Boom/Bust...)



5. What three processes contribute to restoring production after a period of recession or depression? Must these processes function concurrently? (chapter 22)

 
 
6. Discuss the relationship between land speculation and the banking and finance industries. (Boom/Bust...) 
 

 
7. What is the relationship between land speculation and inflation? (Boom/Bust...)



8. Why is full employment considered to be impossible in a modern economy? (Boom/Bust...)



9. How does the problem of the boom/bust cycle relate to the general problem of poverty? (chapter 23)