Theory of Income and Employment

Basic Model of Income Determination

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Investment Multiplier

Introduction Investment refers to the process or action of investing time, money, efforts and matter in something with the hope that it will generate income in future. The mechanism which shows how increase in investment leads to multiple increases in the income levels in the economy is called in .... Read More

Deficient Demand and Excess Demand

ntroduction Before 1930’s, classical school of thought prevailed which advocates that aggregate demand is always equal to aggregate supply in an economy. There is always full employment in an economy. Under classical model, supply creates its own demand, excess supply in one market is automatica .... Read More

Measures to Correct Deficient and Excess Demand

Economists and policy makers have been advocating the role of government and the monetary authorities to intervene in order to bring economic stabilization. Measures to correct the situation of excess demand include the monetary policy of the central bank and the fiscal policy of the government. Fi .... Read More

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