1. According to Marshall, what determines prices, supply or demand? Does the time period matter?
2. What factors, according to Marshall, cause firms to become more efficient as they grow? What determines whether they are increasing or decreasing cost industries? Why don't decreasing cost industries eventually become monopolized?
3. Explain why Marshall believed that taxing increasing cost industries and using the proceeds to subsidize decreasing cost industries is a desirable thing to do.
4. Why do modern supply and demand diagrams have the independent variable on vertical axis rather than, as is more usual, the dependent variable?
5. How does general equilibrium analysis differ from partial equilibrium analysis? What does Walras' general equilibrium analysis have to say about the determination of input and output prices, i.e. the debate over whether input prices cause output prices or vice-versa?
6. According to Wicksell, how does inflation or deflation come about? Can can inflation/deflation be controlled, i.e. can prices be stabilized? If so, how?
7. What is forced saving?
8. According to Irving Fisher, how is the interest rate determined? What competing forces are in balance when the interest rate is at its equilibrium value?
9. What is the Fisher equation? What is the Fisher hypothesis?
10. Explain Fisher's theory of debt deflation.
11. What economic conditions set the stage for the emergence of Keynesian economics? Prior to Keynesian economics, what was the prevailing view regarding government intervention to cure recessions? What was the basis for this view? What is the Keynesian view on government intervention?
12. How is income determined in the Keynesian model? What are the key forces that cause fluctuations in economic activity, i.e. what role do the MPC, MEC, and interest rates interact to produce economic fluctuations? Where do expectations (animal spirits) fit into this explanation? What role can government play in stabilizing the economy?
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