Do you agree or disagree with Frederic Bastiat's theory of the "broken window fallacy"? Explain how you would construct an economic graph using the world that is seen (the boy being praised for breaking the window) and the world that is unseen (the boy being punished because his act cost the baker a window)?
An example of an accurate question would be this: "Yes I agrees with Frederic Bastiat's theory, his theory revolves around more logic of how the "unseen" world is effected by the broken glass. In constructing an economic graph, I would construct a regular supply and demand graph for the business of the baker. Then, with the cause of the boy breaking his window, I would show that it would be an incentive for the Baker to raise his prices to pay for his broken window, thus decreasing the demand of his product.
Now use Frederic Bastiat's theory in our topic of disasters. Do they stimulate or hinder the economy? Describe the costs and benefits of a disaster on the economy.
This is an example of an accurate answer: Disasters hinder the economy by affecting it in a negative way. It brings the economy backwards by all of its destruction and cost of damages. The costs of a disaster can be from death costs to money costs like, new buildings, construction, ect. The benefits that can come from a disaster are very minimal, many believe that disasters create jobs, although those jobs would not have been needed if the disaster did not happen.
