ECON-501
FS03
Dr. Bell

REVIEW QUESTIONS FOR FINAL

 

  1. Discuss the Austrian approach to business cycle theory. How do Austrians deal with "time" and "uncertainty"? Compare and contrast their approach to the Post Keynesian approach.
  2. How do Austrians distinguish between an "artificial" and a "sustainable" boom? What brings each about? Why must a recession follow an artificial boom, according to Austrian theory? Explain carefully.
  3. What role does loanable funds theory play in the Austrian approach? In the Post Keynesian approach? Explain.
  4. Explain Minsky’s Financial Instability Hypothesis (FIH). How are the "turning points" defined? How does Minsky’s FIH relate to Kalecki’s profit equation? Why does Minsky argue that fiscal policy sets a floor to aggregate demand, while monetary policy sets a floor to asset prices?
  5. Discuss the three types of financial positions described by Minsky (hedge, speculative and Ponzi).
  6. Explain the two tenets of Functional Finance. According to Lerner, what is the purpose of collecting taxes? What is the purpose of selling bonds? Why does Lerner argue that the size of the national debt is irrelevant?
  7. In his Functional Finance and the Federal Debt, Lerner suggested that the principles of functional finance should govern policymaking in all nations. Should he have been more careful in his statement? Why? What condition is necessary (but not sufficient) to allowing nations to pursue policy in accordance with Lerner’s principles? Explain.
  8. How does Lerner’s Money as a Creature of the State relate to Goodhart’s description of Chartalist theory? Explain.
  9. Contrast Minsky’s approach to the function of prices to that of neoclassical General Equilibrium theory.
  10. Explain the role played by "big government" and the "big bank" in Minsky’s theory.
  11. And one big-picture question!