Question from MRE Chap. 6 p. 161-165 and Introduction to Post-Keynesian Economics, by Marc Lavoie, Chap. 4 p. 83-96:

1) In a Kaleckian Labor Market or short-term effective demand model of the form (see Lavoie, p. 92) :

1. RAD = (w/p)N + a
2. q = TN

so that at equilibrium:

RAD = q

And: TN = (w/p)N + a

So that: (3) (w/p) = T - a/N

Assume an initial equilibrium where: T = 50, N = 1000, a= 20,000, w/p = 30, RAD=q=50,000, a= 20,000

So that (1) becomes: 50,000 = 30 x 1000 + 20,000 and (3) becomes: 30 = 50 - (20,000/1,000).

Assume employment and output "quantity adjustment".

1. If capitalists decide to increase saving by reducing "capitalist consumption" (spending and investment) by 10,000 so that a=10,000. Is there a solution for N if real wages and productivity stay the same? Will the economy continue to produce the $2,000 in savings that it used to? Why is this the Kaleckian "Paradox of Thrift"?

1. If capitalists are able to reduce costs by cutting wages by 10 so that w/p=20. Is there a solution for N, if capitalist consumption and productivity stay the same? Will the economy produce more profit than it used to? Why is this the Kaleckian "Paradox of Costs."

1. If due to new investment labor productivity increases from T=50 to T=70. Is there a solution for N if capitalist consumption and real wages stay the same? Does N stay the same? Why is this the Kaleckian "Paradox of Productivity."

Question from The Bubble and Beyond, by Michael Hudson, Chap. 11 p. 297-318 and Chap. 18 p. 393-403:

2) Marxists and Post Keynesians believe that "profit" comes out of the production of the unpaid for "surplus value" production of labor. Hudson and the "Neo-Rentierists" believe that in modern capitalism a large share of unearned income from property is "rent" from financial and real estate asset price inflation, and monopoly pricing, that is a transfer unrelated to, or above and beyond, surplus value in production. Explain.

Questions from the Debtwatch Manifesto, p. 22-32, by Steve Keen:

3) Explain why Keen believes that the change in (private) debt, or "change in D" to the income side, and net asset turnover or "NAT" to the expenditure or output side should be included in national income accounting, and why this is consistent with Hudson "Neo-Rentierist" perspective referred to in question 2.

4) Explain how the Keen's generalized system of national income accounts (referred to in question 3) helps to explain the 2008 financial crash and current asset price inflation and stagnant real economic growth.

5) In what sense is Keen's macroeconomic analysis based on Minsky's "irrational exuberance" hypothesis regarding the fundamental instability of private finance in a capitalist economy?

Question from Deficit Linkages, last topic in Week 7 Power Point:

6) Why will unemployment increase if the federal deficit is cut without an increase in private deficit, or in net export competitiveness so that the (full employment) trade deficit declines?