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Marx and the Macroeconomy
1. What is the central driving force of a capitalist economy from the perspective of:
a) Keynes
b) Supply-side Economics
c) Marx
2. Show the impact of an increase in investment on GDP and the Price level, and describe in words the cause-andeffect relationships using a:
a) Keynesian perspective
b) Supply-side perspective
c) Marxist perspective
3. Think of a particular industrial commodity, and draw the circuit of industrial capital associated with it, giving
specific examples of the various inputs (C) and the output (C'). (Assume at first that the industrial capitalist has the
initial money capital (no banks, stockholders or bondholders), owns the land (no landlords), has retail outlets (no
merchants), doesn’t have to pay out to government (no taxes), and that there is no monopoly power.)
4. If the company buys inputs at prices equal to their labor values and sells the output at prices equivalent to labor
values, it cannot earn a profit. True or False, and Why?
5. What is the formula for:
a) the total profit in money terms for this circuit?
b) the total surplus value (in labor value terms)?
6. What is the formula for:
a) the money rate of profit for this circuit?
b) The value rate of profit?
7. In reality, will the company be able to keep all of the surplus for itself? Name at least three other groups or
institutions that will claim a share of this surplus.
8. If conditions of profitablity are good, what will happen to the entire economy? Show on a diagram of GDP and
Price level.
9. If conditions of profitability turn sour, what will happen to the entire system? Show on a GDP & Price level
diagram.