What should policymakers do to prevent another major crisis

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From the late 1980s through 2007, inflation remained fairly tame--a period known as The Great Moderation. Mainstream economists argued that the problems of macroeconomic instability and stagflation had been solved. However, the Global Financial Crisis proved that macroeconomic instability was not solved or conquered.

Paul Krugman wrote an article in September 2009 with the title “How did economists get it so wrong?” Did all economists get it wrong? Explain.

Why are market economies unstable? Based on your explanation, what should policymakers do to prevent another major crisis?

Reference no: EM131169455

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