Concept of Saving

From an individual’s point of view saving is that part of his income which is not spent on consumption. Similarly, from the community’s point of view aggregate saving is that part of national income which is not spent on consumption. In other words, saving is excess of income over consumption expenditure, i.e., S=Y-C, where, S=saving, […]

Labour Market (Pigou’s Version)

Pigou’s Version has given final touch to classical theory of employment, who formulated Say’s law in terms of labour market. According to Pigou, under free competition the tendency of economic system is to automatically provide full employment in labour market. Flexibility in wage rate assures equilibrium in labour market with full employment. Real wage rate […]

Determination of Equilibrium Level of Employment by the principle of Effective Demand

             The equilibrium level of employment is determined by the interaction of aggregate demand and aggregate supply. The point where the aggregate demand function and aggregate supply function intersect each other is the effective demands. At which aggregate demand price and aggregate supply price are equal to each other. This can be illustrated graphically as […]

Say’s Law of Market

Jean Baptiste Say was on early 19th century French economist who wrote the book political economy and propounded law of market with famous proposition “supply creates its own demand.” It is pivot of classical theory. According to Say- “It is production which creates markets for goods. A product is no sooner created than it, from […]