Week 15 Discussion — Rules, Judgment, and Sticky Prices — Traditional alternative (no AI)

Instructors: publish this instead of the adaptive version if you prefer, and unpublish or delete the adaptive one.

Hook

In this week's illustrative economy, both schools of thought read the same recessionary gap: potential output of 1,000 against actual output of 950, a gap of 50, or 5% of potential. They agree on the arithmetic and on the agreed ground. They part ways on two questions you can now argue yourself: how fast prices and wages really adjust, and whether policymakers should follow rules announced in advance or keep room for judgment.

Your discussion question — choose Option A or Option B; they carry the same weight and the same rubric, and you say which you picked.

Option A: Should stabilization policy lean mostly on rules announced in advance (automatic stabilizers on the fiscal side, an announced inflation goal or a steady money path on the monetary side) or keep room for case-by-case judgment when a gap opens? Take a position, support it with this week's ideas (the Keynesian tradition, the classical and monetarist tradition, rules versus discretion, inflation targeting, and the agreed ground), and label which part of your claim is positive (testable against evidence) and which part is normative (a judgment about what ought to happen).

Option B: Think of one price or wage you have watched closely, such as a rent, a menu, a bus fare, or a paycheck. When demand for it changed, did it adjust quickly or slowly? Use that observation as one piece of evidence on the top row of the schools table (sticky versus flexible prices), say which column it supports, explain what one observation cannot prove about a whole economy, and present the strongest case for the other column.

There is no single right answer. The Keynesian case and the classical and monetarist case can each be argued well, and how fast prices adjust is a question for evidence, not a party label. Your job is to take a position, support it with this week's tools, state the agreed ground plainly, and keep what the model predicts (positive) separate from what you think ought to be done (normative). Pick the option you actually care about, and tell us your reasoning.

Expectations

Activity format: one initial post followed by two substantive peer replies. Plan on about 45 minutes across the two deadlines; your instructor sets both due dates in Canvas.

Your initial post — by the first due date (early in the module week):

• Say which option you chose.
• For Option A, state in one clear sentence whether policy should lean on announced rules or keep room for judgment; for Option B, describe your price or wage and say which column of the schools table it supports.
• Use at least two of this week's terms (school of thought, Keynesian tradition, classical tradition, monetarist tradition, flexible prices and wages, activist policy, rules versus discretion, agreed ground, inflation targeting) correctly.
• Give your reason, name the strongest point of the other column, and label which sentences are positive and which are normative.
• Length: roughly 150–250 words if written. You may instead record your post as audio or video (about two minutes) and attach a transcript; both forms are scored by the same rubric.

Your replies — by the second due date (the end of the module week):

• Reply substantively to at least two classmates.
• A substantive reply does more than agree: make the strongest case for the column the poster set aside, check whether the poster mixed up rules versus discretion with fiscal versus monetary, or point out a normative claim presented as if it were positive. "Nice point!" on its own does not count.

What a strong post looks like:

I chose Option B. The rent on my apartment did not fall when two nearby buildings sat half empty; the landlord held it for a full lease year. Positive claim: that price was sticky downward, which fits the Keynesian column. But one lease is not an economy, and a classical reader would say rents did adjust once leases came up for renewal. I partly agree, so I would want to see how fast many prices changed in a slump before choosing a column.

Notice how it names the choice, uses the top row of the schools table, labels the positive claim, and answers the other column fairly. That is the bar.

Participation rubric

This discussion is worth 10 points. The three criteria below look at your initial post and your peer replies.

Post early if you can — the best threads happen when people have time to reply before the second due date.

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