O'Reilly logo

Macroeconomics: Theory and Policy by Vanita Agarwal

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

5

The Keynesian Model of Income Determination in a Two Sector Economy

After studying this topic, you should be able to understand

  • Aggregate demand is the total amount of goods demanded in an economy.
  • The consumption function is a relationship between income and consumption.
  • Saving is income that is not spent on consumption.
  • The aggregate demand function is obtained by a vertical summation of the investment function and consumption function.
  • In the Keynesian theory, there are two approaches to the determination of income and output: Aggregate Demand ‒ Aggregate Supply Approach and Saving ‒ Investment Approach.
INTRODUCTION

This is the first of the series of four chapters, which focuses on the determination of the equilibrium level of income ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required