The following points will highlight the three main assumptions of Keynes’ psychological law. 1. It presumes a constant psychological institutional complex. In other words, it means that consumption depends upon income alone and other institutional and psychological factors such as income distribution, price level, population growth, fashion, tastes and habits do not changes. In the short period, it may not [...]
The following points highlight the seven measures for stepping up consumption. The measures are: 1. Income Redistribution 2. Social Security 3. Wages Policy 4. Easy Credit Facilities 5. Urbanisation and Colonisation 6. Advertisement and Propaganda 7. Conspicuous Consumption. Stepping Up Consumption Measure # 1. Income Redistribution: We have known that the propensity to consume of the poor people is higher [...]
The following points highlight the seven major importance of Keynes Psychological Law of Consumption. The importance are: 1. Vital Importance of Investment 2. Repudiation of Say's Law 3. Decline in MPC 4. Over Saving Gap 5. Income Generation 6. Turning Points of Trade Cycle 7. Underemployment Equilibrium. Importance # 1. Vital Importance of Investment: One of the most important implications [...]