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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?)