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Microeconomics II
book

Microeconomics II

by D.N. Dwivedi
August 2011
Intermediate to advanced content levelIntermediate to advanced
368 pages
14h 51m
English
Pearson India
Content preview from Microeconomics II
228 Chapter 10
given income shis or if both these curves shi, the new rate of interest will be given by the point of
intersection of the new position of the two curves’ (Keynes, p. 179). ‘But this,’ according to Keynes, ‘is
nonsense theory.’ e error in classical theory lies in its assumption that investment demand schedule
(I) can shi without causing a shi in the saving schedule (S). In fact, when investment schedule shis,
it means a change in investment. Change in investment causes a change in income (Y) because Y =
f(I). When income changes, savings change too because S = f(Y). For instance, if investment schedule I
1
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Publisher Resources

ISBN: 9788131797655