Determinants of Consumption Function

The factors which determine the level of consumption is called determinants of consumption. J.M. Keynes mentions two principal factors which influence the consumption function and determine its nature (slope) and position. They are: subjective factors, and objective factors. Subjective Features: The subjective factors affecting propensity to consume consists of those psychological motives. Therefore, subjective factors […]

Say’s law and Fisher’s equation (Quantity Theory of Money)

Say’s law also depends upon the classical quantity theory of money which is propounded by Irving Fisher depending on transaction approach. It states that general price level is function of money supply. Fisher’s equation is MV = PT, where, M is the supply of money, V is velocity of money, P is general price level […]