ECON 364
Homework Assignment Six – (27 pts.)

DUE TUESDAY, APRIL 12 AT THE BEGINNING OF CLASS

ANSWERS MUST BE TYPED - EXCEPT DIAGRAMS - AND ALL PAGES MUST BE STAPLED!

1.  Why do Austrian economists call for a "dual methodology" -- one for the natural sciences and one for the social sciences?  (5 pts.)

2.  Explain what the Hayekian triangle:

a.  represents in general. (3 pts.)

b.  how time is incorporated in to the triangle. (3 pts.)

c.  how subjective value is incorporated into the triangle and why the theory disagrees with the labor theory of value. (6 pts.)

d.  draw the triangle and show how it would "shift" if there were an increase in time preferences by a lot of people in the economy -- explain why you shifted the triangle the way you did and what it means. (6 pts.)

3.  Explain why the triangle represents a "spontaneous order" and why/how institutions play a big role in the shape, etc. of the triangle. (4 pts.)