Page 63 - DECO201_MACRO_ECONOMICS_ENGLISH

Macro Economics

Notes Figure 3.32
Y
Real S S
R/I 1 2

r E
1 1
r E
2 2
I

X
O I I S, I
1 2
2. Product Market: With rise in full employment level from OL to OL , (Figure 3.30) the full
1 2
employment GDP rises from OY to OY . The AS curve shifts to the right. AD curve
f1 f2
remaining unchanged price level falls (Figure 3.31) from P to P .
1 2
3. Capital Market: With rise in real GDP, saving rises. The saving curve shifts to the right.
Investment curve remaining the same real, ROI falls from r to r (Figure 3.32). The new
1 2
saving and investment equality are at E . Investment rises.
2
Effect on the price level can also be shown through the demand and supply of money by using
Figure 3.28

Case Study A Radical Reinterpretation of Labor's Right to the
Whole Produce

he fact that profits are an income attributable to the labor of businessmen and
capitalists, and the further fact that their labor represents the provision of guiding
Tand directing intelligence at the highest level in the productive process, suggests a
radical reinterpretation of the doctrine of labor's right to the whole produce. Namely, that
that right is satisfied when first the full product and then the full value of that product
comes into the possession of businessmen and capitalists (which is exactly what occurs, of
course, in the everyday operations of a market economy). For they, not the wage earners
are the fundamental producers of products.
By the standard of attributing results to those who conceive and execute their achievement
at the highest level, one must attribute to businessmen and capitalists the entire gross
product of their firms and the entire sales receipts for which that product is exchanged.
Such, indeed, is the accepted standard in every field outside of economic activity. For
example, one attributes the discovery of America to Columbus, the victory at Austerlitz to
Napoleon, the foreign policy of the United States to its President (or at most a comparative
handful of officials). These attributions are made despite the fact that Columbus could not
have made his discovery without the aid of his crewmen, nor Napoleon have won his
victory without the help of his soldiers, nor the foreign policy of the United States be

Contd...

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