DETERMINATION OF INCOME AND EMPLOYMENT NOTES
DETERMINATION OF INCOME AND EMPLOYMENT Key concepts Aggregate demand and its components. Propensity to consume and propensity to save Short run fixed price in product market equilibrium output, investment or output multiplier and the multiplier mechanism. Meaning of full employment and involuntary unemployment. Problems of excess demand and deficient demand. Measures to correct excess demand and deficient demand. Change in government spending. Availability of credit. Autonomous consumption: The consumption which does not depend upon income.(Or) The amount of consumption expenditure when income is zero. C > 0. Even ifincome is zero consumption cannot be zero. Consumption will take place from past savings for survival. Autonomous Investments : It is Investment which is made irrespective of level of income. It is generally run by the government sector. It is income inelastic. The volume of autonomous investment is same at all level of income. Key poin