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Syllabus

Determination Of Income And Employment — Syllabus

ICSE · Class 12 · Economics

What Determination Of Income And Employment covers in ICSE Class 12 Economics: 4 topics, for the 2026-27 session.

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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4 Topics · ICSE Class 12 Economics · 2026-27

Topics in Determination Of Income And Employment

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.

Key Concepts

Central concept: Determination of equilibrium income and employment in the economy

Aggregate DemandAggregate SupplyConsumption FunctionPropensity to ConsumeSaving FunctionPropensity to SaveInvestment FunctionEx-ante and Ex-post Saving and Investment

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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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