Advertisement Remove all ads

Define Or Explain the Following Concept :Effective Demand . - Economics

Advertisement Remove all ads
Advertisement Remove all ads
Advertisement Remove all ads

Define or explain the following concept :

Effective demand .

Advertisement Remove all ads

Solution

(i) According to Lord Keynes, the equilibrium between aggregate demand and aggregate supply determines the point of effective demand. It is the actual expenditure incurred by all the people, on all types of consumer goods and capital goods in the economy during a given period of time. The flow of expenditure, in turn, determines the flow of income.

(ii) Thus, in the economy : Effective Demand = Total Expenditure = National Income = National Output.

Concept: Demand
  Is there an error in this question or solution?

Video TutorialsVIEW ALL [3]

Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×