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Submitted By thuyazaw
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Q1. For Kalecki wat is the macroeconomic origin of profit at the aggregate level?
There are three classes that were divided when explain about macroeconomic and snake diagram. Capitalists were firm owners whose earnings are firm profits. Workers earnings come from selling labor to capitalists. Small proprietors were poor peasants, artisans, small shopkeepers, various service providers. Workers and small proprietors consume their entire incomes. Thus all saving is done by capitalists, out of profits.
There are two sectors, producing investment goods and consumer goods. The total consumption is the same as the output of the consumer goods sector, and total investment the same as output of the investment goods sector. The basic exchange relations between the two sectors can be seen in snake diagram.

As demand for investment goods rises, some of the new savings comes straight from the investment goods sector, some from higher demand for goods from the consumer goods sector; this greater demand touches off a sort of multiplier process, with the sector re-equilibrating when the new higher savings equals the new higher demand coming from the investment goods sector.
If consumer goods output cannot rise, then prices in that sector will be pushed up and real wages will fall. The increased profits are what generate the higher savings from that sector. Workers may in turn demand higher wages, touching off a wage-price spiral. Certain segments of the consumer goods sector that are important in workers' consumption, especially food, may turn out to be important sources of inflation if output responds slowly. If consumer goods output rises easily because of excess capacity, then output rises.
If the distribution of income shifts toward capitalists in either sector, the result is a break of demand for goods because of lower real wages. This might reduce price…...

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