Keynesian Economics

1
Keynesian Economics

• According to John Maynard Keynes in the
  short-run, the level of GDP is determined
  primarily by demand.

2
Keynesian Consumption Function

• The relationship between consumer spending and
  income, in the short-run, has two parts C Ca
  by
• C Consumption Spending
• Ca Autonomous Consumption Spending
• b Marginal Propensity to Consume and
• y Level of Income.

3
Keynesian Saving Function

• The relationship between the level of saving and
  the level of income, in the short-run, is
• S - Ca (1 - b)y
• S Consumer Saving
• Ca Autonomous Consumption Spending
• 1 - b Marginal Propensity to Save and
• y Level of Income.