Political Economy
Directions: Answer any four of the following seven questions. Make your answers as thorough as possible, within the time constraints of this exam.
- Explain why capitalist economic activity tends to expand across national boundaries. Why does the expansion of capitalist economic activity across national boundaries tend to create relations of economic and political domination of one country by the ruling class of another?
- What harmful effects does a capitalist economic system tend to have on the natural environment? Carefully explain why it has these effects. How can the harmful effects capitalism has on the environment be prevented?
- Explain why a capitalist economic system tends to bring about a highly unequal distribution of income. Why did income inequality rise significantly in the U.S. after about 1980?
- Recessions in a capitalist economy have two different types of causes: coordination failures (the aggregate demand/aggregate supply relation) and class conflict (struggle over the wage rate). Explain how each can cause a recession. What government policies or economic reforms could be undertaken to prevent recessions?
- What is a social structure of accumulation (SSA)? According to the SSA theory, why does every SSA eventually stop working effectively? What happens to the economy when an SSA stops working effectively?
- How did the neoliberal form of capitalism in the U.S. give rise to a severe financial and economic crisis starting in 2008? What role was played by rising inequality, a deregulated banking system, and the real estate bubble?
- What is a socialist economic system? What are the arguments for and against a socialist economic system as an alternative to capitalism?
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