Question 1: What determines unemployment is a contentious issue between the
mainstream and the Keynesian economics.
(a) Compare and contrast the mainstream (the one presented in your textbook as well as
in King, 2015 and Lavoie, 2010) and the ‘Keynesian’ views (King 2015 and Lavoie, 2010)
on unemployment. (Do not forget to mention the underlying assumptions of the
mainstream view of labor market; how the ideal labor market works; the non-accelerating
inflation rate of unemployment, NAIRU; and rigidities in the labor market).
(b) What are the implications of the heterodox views of the monetary theory of
production in terms ofunemployment? (In other words, what are the implications of the
Keynesian understanding and conceptualization of money and banking in terms of
unemployment? For example, how does the theory of monetary circuit explain
unemployment given the Keynesian understanding of money and banking?)
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Question 2: Investment spending is one of the most volatile components of the
aggregate demand.
(a) Compare and contrast the mainstream and Keynesian theories in terms of what
determines investment spending (Stiglitz, 1993, King 2015).
(b) What are the implications of the heterodox views of the monetary theory of
production in terms of investment spending? (In other words, what are the
implications of the Keynesian understanding and conceptualization of money and banking
in terms of investment spending? For example, how does the theory of monetary circuit
explain investment spending given the Keynesian understanding of money and banking?)
Question 3: Aggregate consumption spending is an important component of aggregate
demand. However, there are competing views in economics about what determines it and its
role in economic policy.
(a) Compare and contrast the mainstream consumption theories (i.e., the life-cycle and
the permanent income hypotheses) and heterodox theories (King, 2015; Lavoie, 2010;
Seccareccia, 2010) in terms of what determines aggregate consumption expenditures
and why.
(b) What are the implications of the heterodox views of the monetary theory of
production in terms of consumer spending? (In other words, what are the
implications of the Keynesian understanding and conceptualization of money and banking
in terms of consumer spending? For example, how does the theory of monetary circuit
explain consumption spending given the Keynesian understanding of money and
banking?)
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