Yesterday, via Mark Thoma, I saw that the New York Times has an 18 question economics quiz, based on questions from the AP Economics Test. I excitedly went there to see what loaded questions and faulty premises pervaded it. Sadly, I found most of it to be pretty vanilla- in the 18 questions, I didn”t really come across anything that was controversial or that would be called into question by the current crisis (look for yourself and see if you come to the same conclusion).
Now, I see that Catherine Rampell, who posts for Economix, the NYT econ blog, has a post on this same quiz. Rampell writes,
I’ve heard from some high school economics teachers, though, that their duties have gotten inordinately harder over the last six months because government actions have deviated so far from what the College Board would recognize as correct.
For example, here’s one sample question:
44. Policy makers concerned about fostering long-run growth in an economy that is currently in a recession would most likely recommend which of the following combinations of monetary and fiscal policy actions?
MONETARY POLICY…/…FISCAL POLICY
a. sell bonds…/…reduce taxes
b. sell bonds…/…raise taxes
c. no change…/…raise taxes
d. buy bonds…/…reduce spending
e. buy bonds…/…no change
The correct answer is supposed to be ‘E’: Policy makers “would most likely recommend” no change in fiscal policy, either in spending or taxation. But that answer does not even remotely resemble what policy makers have actually done in response to the current crisis (or, for that matter, in response to previous recessions).
Now that’s interesting. Note that increase government spending is not even an option for fiscal policy.
At what point do the neoclassical answers to these questions become so out of touch with reality that even high school economics teachers will have to abandon it? I’m not saying AP economics should be so rigorous as to question all the assumptions of neoclassical economics and do reality checks. At the same time, however, undergrads are supposed to be getting the same stuff in their principles courses.