Introduction: Saving function is the counter part of consumption function because S=Y-C. Therefore S=f(Y). Saving means economic surplus, it may be defined as the difference between current income and current consumption. Keynes defined savings as
Introduction: J.M Keynes created the theory of liquidity preference theory of interest to explain the role of the interest rate by supply and demand for money in 1936. According to Keynes the rate of interest
Introduction: The Keynesian concept of consumption function stems from the fundamental psychological law of consumption which states that there is a common tendency for people to spend more on consumption when income increases but not
Introduction: The classical economist believed in the existence of full employment in the economy. To them full employment was a normal situation and any deviation from this regard as something abnormal. According to Pigou the
Multiplier meaning: The multiplier refers to the effect of changes in investment outlays on aggregate income through induced consumption expenditure. Thus the multiplier express a relationship between an initial increment of investment and the resulting
Keynes Theory of Employment: The Keynes Theory of Employment explains with the principle called an effective demand. J.M. Keynes, father of modern economics criticize the classical theory of employment given by classical economist. He gave
