From Cambridge to Eternity: “Marginal Propensity to Consume 04”
More or less arguably, the first textbook of macroeconomics is written by Prof. Paul Samuelson ( Economics , 1948). He starts off by warning against “fallacy of composition.” Namely, “What is true for each is not necessarily true for all; and conversely, what is true for all may be quite false for each individual” (p.9 of pp. 622). In short, the market may not be like the economy and conversely. Alas, we as human are prone to err. In the first place, each and all of us are created with “blind spots.” Macroeconomists not excluding Paul Samuelson as human are prone to fall in the trap of the very fallacy. An interesting question by the way of commonwealth: What are the “several interacting markets” (to a geo-famed celeb) of macroeconomics like? Fallacy of Composition . At each moment, the money stock is “fixed” by the central bank, or so is claimed by household-name macroeconomists. As some in...