Economist L. Randall Wray writes in a paper, “[t]his approach, [M-C-M’], is suited to the study of realworld capitalist economies that can be characterized as operating at less than full capacity as the normal situation]. In contrast, the neoclassical [i.e., conventional], value theory is consistent with the study of the economy dominated by scarcity, in which Say's Law holds and flexible relative prices ensure full employment of all resources”(emphasis added).Explain Dr. Wray’s position as well as the position of the conventional approach, i.e., C-M-C’.  What are their similarities and differences, if any? What are their respective processes on how the economy operates (make sure to include the concepts of price movements or lack thereof, Say’s Law, loanable funds theory, inventory, quantities of money, labor & products, hoarding, scarcity)? Note this is a question about the economic adjustment process.

Does the government ever need to intervene in the economy from these two views? What argument does Keynes make about the components of GDP in a closed economy (C + I + G)? What role does expectations of the near future play in his argument?

Give two common sense reasons why businesses will not want to lower prices immediately when experiencing a decrease in demand (sales). Does this validate the orthodox or heterodox theory of the economic process?