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Determination Of Income And Employment — Revision Notes

ICSE · Class 12 · Economics

Determination Of Income And Employment revision notes for ICSE Class 12 Economics: 4 topics in quick points. Part of the ICSE Class 12 Economics syllabus.

43 questions38 flashcards11 formulas & key relations5 concepts

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A labeled graph showing the linear consumption function (C = C̄ + cY), identifying autonomous consumption (C̄) as the y-intercept and marginal propensity to consume (c) as the slope.
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Key Topics to Revise

1

1. Aggregate Demand and Aggregate Supply

  • Aggregate Demand refers to the total value of final goods and services demanded in an economy during a year.
  • Aggregate demand and aggregate expenditure mean the same thing.
  • In a two-sector economy, aggregate demand has two components: consumption demand and investment demand.
2

2. Consumption Function and Propensities to Consume

  • The consumption function shows the relationship between income and consumption.
  • Income here means disposable income, which is income after taxes.
  • Keynes' Psychological Law of Consumption says consumption rises when income rises, but by less than income.
3

3. Saving Function and Propensities to Save

  • Saving is the part of income not spent on current consumption.
  • Saving is also the excess of income over consumption.
  • Saving function shows the relationship between saving and income.
4

4. Investment Function and Investment Multiplier

  • Investment means addition to the existing stock of capital.
  • According to Keynes, investment depends on marginal efficiency of capital and the rate of interest.
  • Firms invest as long as marginal efficiency of capital exceeds the rate of interest.

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Full Notes

Key Concepts

Aggregate demand is the total valueAggregate supply is the total amountThe classical view holds that aggregateThe Keynesian view holds that aggregateThe consumption function shows the relation

Frequently Asked Questions

What are the important topics in Determination Of Income And Employment for ICSE Class 12 Economics?
Key topics in Determination Of Income And Employment include Aggregate Demand and Aggregate Supply, Consumption Function and Propensities to Consume, Saving Function and Propensities to Save, Investment Function and Investment Multiplier. Study these first, then practise questions on each for the ICSE Class 12 board exam.
How should I revise Determination Of Income And Employment for the ICSE Class 12 board exam?
Learn the core ideas first, then work through the 43 practice questions on Determination Of Income And Employment. Revise definitions regularly and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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All ICSE Class 12 Economics Revision Notes

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