My OpenLearn Profile
Personalise your OpenLearn profile, save your favourite content and get recognition for your learning
Ever shaken an invisible hand? Been flattened by a falling market? Or wondered what took the bend out of Phillips' curve? David Mitchell helps reveal some of the great dilemmas faced by governments trying to run an economy - whether to save or spend, control inflation, regulate trade, fix exchange rates, or just leave everyone to get on with it and not intervene. You'll learn why Adam Smith put such a high price on free markets, how Keynes found a bold new way to reduce unemployment, and what economists went on to discover about the impact of policy on people's and businesses' behaviour - which may not always be entirely rational...
Track 5: The Impossible Trinity
The Impossible Trinity or 'trilemma' suggests that it is impossible for a country to maintain a fixed exchange rate, free capital movement and an independent monetary policy at one and the same time.
- Read a transcript of this track - you'll need a PDF viewer, such as Adobe's free Adobe Reader
- Download this track from iTunes - you'll need Apple's free iTunes software
- Discover more from The Open University and iTunesU at open.edu/itunes
Tracks in this podcast:
| Track | Title | Description |
|---|---|---|
| 1 | The Invisible Hand | Economist, Adam Smith, used the term The Invisible Hand to describe the self-regulating nature of the market place - a core concept for so-called free-marketeers. Play now The Invisible Hand |
| 2 | The Paradox of Thrift | The Paradox of Thrift suggests that while it may be wise for an individual to save money when income is low and job prospects are precarious, it could be collectively disastrous if everyone is thrifty together. Play now The Paradox of Thrift |
| 3 | The Phillips Curve | Bill Phillips' curve has historically been described as an inverse relationship between the rate of unemployment and the rate of wage (and therefore price) inflation - but since his analysis became popular the relationship has changed. Play now The Phillips Curve |
| 4 | The Principle of Comparative Advantage | David Ricardo's famous economic model, predicts that if there are just two countries and two products both can be better off if they specialise and trade in the thing they’re relatively best at. Play now The Principle of Comparative Advantage |
| 5 | The Impossible Trinity | The Impossible Trinity or 'trilemma' suggests that it is impossible for a country to maintain a fixed exchange rate, free capital movement and an independent monetary policy at one and the same time. Play now The Impossible Trinity |
| 6 | Rational Choice Theory | Without a belief in rational behaviour, it’s hard to design an economic policy with predictable results. In practice, people's errors or misinformed choices can frustrate policy design. Play now Rational Choice Theory |
Rate and Review
Rate this video
Review this video
Log into OpenLearn to leave reviews and join in the conversation.
Video reviews
these theories have evolved due to the evolution in shape and size of world economy, but most crucially, the bulk of evolutionary processus had taken place following a major crisis: war, recession, pandemic...
without arguments, the 19th and 20th centuries had been the most prductive time capsules for advancement of the science of Economics,
without these advancements, there is no doubt, the world economy would not be as stable and coperative as it is nowadays.