Capitalism Macroeconomics Lecture 1

Orientation/review. The dependence of the division of labor on money. The vital connection between money making and productive activity in a division-of-labor society. Money-making and the distinction between production and consumption, productive expenditure and consumption expenditure, capital goods and consumers’ goods. The quantity theory of money. The increase in the quantity of money as the cause of rising prices. READINGS Reisman: pp. 141–144; 441–462 Optional: Samuelson, Chapters 1 and 4