1.

John Maynard Keynes' Diagnosis and Solution for the Economic Crisis of the 1930s:

According to Keynes, the recession of the 1930s was caused by insufficient aggregate demand, which
resulted in high unemployment and stagnation. He argued that classical economic theory, which believed
in the self-correcting nature of markets, was inadequate in explaining the prolonged economic downturn.
Keynes proposed that during periods of economic recession, the government should intervene to stimulate
demand through fiscal policy, such as increasing public spending and cutting taxes. This intervention was
intended to boost overall economic activity, reduce unemployment, and restore economic growth.
Keynesian economics became a foundational concept in macroeconomic theory and policy.

2. Neoclassical Theory and Income Distribution:

Neoclassical theory posits that the distribution of income is determined by the productivity and marginal
contributions of each factor of production—land, labor, and capital. According to this theory, in a
competitive market, factors of production are compensated according to their marginal productivity. In
other words, individuals receive income based on the value of their contribution to the production process.
Neoclassical economists argue that this system is efficient and fair, as it rewards individuals in proportion
to their economic contributions.

3. Kalecki's Arguments:

● a) Pricing: Kalecki challenged the neoclassical idea that prices are solely determined by supply
and demand, arguing that pricing is influenced by the degree of monopoly power in the market.
● b) Profit and Investment: Kalecki contended that profits are a key determinant of investment, and
changes in profit levels affect the level of investment in the economy.
● c) Full Employment: Contrary to classical economic thought, Kalecki argued that achieving full
employment might lead to a shift in the balance of power between capital and labor, potentially
causing social and political tensions.

4. 'Conspicuous Consumption' and Thorstein Veblen's Economic Ideas:

Conspicuous consumption refers to the ostentatious display of wealth through lavish spending on goods
and services intended to enhance social status. Thorstein Veblen, an American economist and sociologist,
introduced the concept. In his work "The Theory of the Leisure Class," Veblen critiqued classical
economic theories and introduced the idea that economic behavior is influenced not only by utility but
also by social and cultural factors. He argued that individuals engage in conspicuous consumption as a
way to signal their social standing and to conform to societal expectations. Veblen's insights laid the
foundation for institutional economics, emphasizing the importance of social context in economic
analysis.
5. Schumpeter's Contribution on Innovation:

Joseph Schumpeter's main contribution was his theory of economic development, where he highlighted
the role of entrepreneurship and innovation. According to Schumpeter, innovation is the introduction of
new products, processes, or business models that disrupt existing markets and create economic change.
He argued that entrepreneurs, through the process of creative destruction, drive economic progress by
introducing innovations that replace or transform established industries. Schumpeter believed that
innovation was the primary force behind economic growth, and he emphasized the dynamic and
evolutionary nature of capitalist economies. This perspective influenced the study of business cycles,
economic development, and the role of entrepreneurship in modern economic thought.