Meanwhile, Keynes supplied a theory of the interest rate built on liquidity preference, and so eliminated the need for a marginal physical productivity of the aggregate capital stock to underpin the theory of the rate of interest. Keynesian economics is a theory that says the government should increase demand to boost growth. As a result, the theory supports the expansionary fiscal policy. Its main tools are government spending on infrastructure, unemployment benefits, and education. Keynes is considered to be the greatest economist of the 20 th century. John Maynard Keynes was not a development economist as the description is used today. However, his 'The General Theory of Employment, Interest and Money' (1936) won him everlasting fame in economics. They start by arguing that the huge increase in income inequality has also had major political consequences. Keynesian Theory of Income Determination . So far so good. Abstract. 91-95) identified six objective factors affecting the propensity to consume-(I) prices, (2) taxes, (3) wealth, (4) interest rates, (5) the distribution of income, and (6) expectations of future income. As Kaldor has pointed out, Keynes was never interested in the problem of distribution of income as such; the determination of its level was his main concern: ‘One may nevertheless christen a particular theory of distribution as ‘Keynesian’ if it can be shown to be an application of the specifically Keynesian apparatus of thought’ (Kaldor 1956, p. 94). A. KREGEL The post-Keynesian explanation for the distribution of income emphasizes the central role of investment in determining not just output and employment, but also the share of wages and profits in national income. He did not address directly issues of national or international poverty and income distribution; only indirectly through his focus on unemployment, which has always been, and remains, a major cause of poverty in both developed and developing countries.   Keynesians believe consumer demand is the primary driving force in an economy. According to Keynes, there is a positive relation between the consumption and the level of income. There are merely two sectors that is, consumers ( C ) and firms ( I ). (b) Keynesian Theory: With this background, Keynes, a British Economist, propounded his own theory and in 1936, brought out his famous book “General Theory of Income, Interest and Money” which brought about a revolution in economic thought. 2. John Maynard Keynes’s most influential work was The General Theory of Employment, Interest and Money (1935–36). He wrote several books. This led to the emergence of Macroeconomics as a separate branch of economics. In … ulates the Cambridge Post Keynesian (CPK) theory of income distribution. Post-Keynesian Theory: Income Distributbn J. Section 4 describes the Kaleckian extension of the CPK approach that includes less than 1Chief Economist, U.S.-China Economic and Security Review Commission, 444 North Capitol Street, Washington DC 20001. e-mail: tpalley@uscc.gov. It followed that aggregate income distribution, the division of national product between I would like to thank Bill Gibson for Keynes's biographer Robert Skidelsky writes that the post-Keynesian school has remained closest to the spirit of Keynes's work in following his monetary theory and rejecting the neutrality of money. INTRODUCTION In the General Theory Keynes (1973a, pp. Assumptions of keynes: Keynes made the assumption to describe income determination in a simple manner a follows: 1. Krugman and Wells articulate and expand on a thesis that they have suggested previously. Assumptions of keynes. 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