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Home Determination of National Income Keynes Theory of Income Determination


Keynes Theory of Income Determination:


Definition and Explanation:


It has been the practical experience of every country of the world that economic progress has never run an even course. There have been wide fluctuations in the national income from time to time. The earlier economists were of the view that if at any time there was a period of prosperity, it is then generally followed by period of depression. When an economy is in the grip of depression, it automatically recovers and soon grows into a boom. It was believed that economy normally operates at the level of the employment.


J.M. Keynes in his book, "General Theory of Employment Interest and Money" has contradicted this view point of the earlier economists. He is of the opinion that if an economy operates at a level of equilibrium, it is not necessary that there should be a high level of employment in a country. It is just possible that there may be millions of persons unemployed. So according to Keynes, if any country wishes to achieve high level of employment, it can only do so through the changes in the magnitude of investment.

Relevant Articles:

Logical Identity of Saving and Investment
Keynes Theory of Income Determination
Determination of Equilibrium for National Income in a Two Sector Economy
Inflationary and Deflationary Gaps

Principles and Theories of Micro Economics
Definition and Explanation of Economics
Theory of Consumer Behavior
Indifference Curve Analysis of Consumer's Equilibrium
Theory of Demand
Theory of Supply
Elasticity of Demand
Elasticity of Supply
Equilibrium of Demand and Supply
Economic Resources
Scale of Production
Laws of Returns
Production Function
Cost Analysis
Various Revenue Concepts
Price and output Determination Under Perfect Competition
Price and Output Determination Under Monopoly
Price and Output Determination Under Monopolistic/Imperfect Competition
Theory of Factor Pricing OR Theory of Distribution
Principles and Theories of Macro Economics
National Income and Its Measurement
Principles of Public Finance
Public Revenue and Taxation
National Debt and Income Determination
Fiscal Policy
Determinants of the Level of National Income and Employment
Determination of National Income
Theories of Employment
Theory of International Trade
Balance of Payments
Commercial Policy
Development and Planning Economics
Introduction to Development Economics
Features of Developing Countries
Economic Development and Economic Growth
Theories of Under Development
Theories of Economic Growth
Agriculture and Economic Development
Monetary Economics and Public Finance

History of Money

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