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A TREATISE ON MONEY

of the Cycle, which results from the non-fulfilment ofAssumption Alpha, is that the Cycle does not last forjust one, and only one, production period. It be-comes much more complicated, and one can onlydescribe its exact course if one first makes an assump-tion as to its exact character.

To take a particular case of the non-fulfilment ofAssumption Alpha let us assume that the entrepreneursincrease their expenditure on personal consumptionby the whole amount of their windfall profits in theprevious “ week ”, in which case their “ savings ” asdefined above are negative. As before, the new pur-chasing power will effectively reach the consumersone week late, so that the situations in the first andsecond weeks are as before ; but in each later succes-sive week there will come on the market as purchasingpower for finished goods not only the increased expend-iture of the newly employed but also the equivalentof the windfall of the entrepreneurs in the previousweek. 1 Thus in the third week prices will rise to

by easy algebra 2 ) in the gth week prices are

falls as part of their regular income, and therefore do not increase thecarry-forward of their income-deposits proportionately to them.

J, x(2-m) x(l -m) \t(2r-l) t(2r-l)J

the fourth week to 1 +/ s(6-3 m)

x(3 - 2m)

i.e. to pi 1 +

t{2r-l)

x(3-m) x(3-2m)'

t(2r-l) t(2r-\)

and so on, until (as is

t(2r -1)

(q-l)(q-2m)

t(2r-l)

1 It is assumed that tho recipients do not regard their successive wind-

2 For if prices in the yth interval are p( 1-M,

<(2r - 1),

1-m. Therefore s a = i(q - 1 - m)(?-l)(g~2m)

{(l-ro) + (g-l-m)}