Description of Kynesian's Theory Assumptions of this theory Table and graph Difference between Classical and Kynesian's Theory

1. WELCOMEBy- Ghanshyam kumawat
GK
Student of APS

2. Keynesian’s
Theory

3.  Effective Demand
A.D.= C + I
 Aggregate Demand:
1.Consumer side(consumption exp.=A.D.)
2.Production side(producer receipt=A.D.)
 Aggregate Demand Schedule:
A.D.= F(N) N=Labour
 Aggregate Supply
A.S.= Cost of production

4.  Consumption function
 Propensity to Consume:
1.Average Propensity to Consume
2.Marginal Propensity to Consume
 Autonomous Consumption
 Induce Consumption
 Saving function
 Investment function
 Marginal efficiency of capital

5. Assumptions of Keynesian’s Theory
1. It’s a Short-run Analysis.
2. It’s a Perfect Competition.
3. It’s a Closed Economy.
4. Equilibrium exist at the unemployment
5. Diminishing Marginal Productivity
6. Labour is the only factor of production.
7. The value of money is constant, So no difference
between money and income.
8. Money also acts as a store of value.
9. Savings & Investment function

6. Empl Y I C S=Y-C AD=C+I AS=C+S
0 0 75
10 100 75
20 200 75
30 300 75
40 400 75
50 500 75
60 600 75
70 700 75
80 800 75
90 900 75
Table
Q a= 25 b= 0.75
C= a+bY

7. Empl Y I C S AD AS
0 0 75 25 -25 100 0
10 100 75 100 0 175 100
20 200 75 175 25 250 200
30 300 75 250 50 325 300
40 400 75 325 75 400 400
50 500 75 400 100 475 500
60 600 75 475 125 550 600
70 700 75 550 150 625 700
80 800 75 625 175 700 800
90 900 75 700 200 775 900
Table

8. E

9. Difference Between
Classical Theory & Keynesian's Theory
1. Concept of Involuntary Unemployment
2. Concept of Equilibrium
3. Relative importance of Demand & Supply
4. Function of Money
5. Rate of Interest
6. Value of Money
7. Adjustment of Price and Output
8. Necessity of State / Government Interference
9. Saving is a social vice
10. Nature

10. THANK
YOU
GK
• By- Ghanshyam kumawat