Permanent income hypothesis Introduction :- The permanent income hypothesis (PIH), introduced in 1957 by Milton Friedman  (1912–2006). It is a key concept in the economic analysis of consumer behavior. Like Duesenberry’s RIH, Friedman’s hypoth­esis holds that the basic relationship between consumption and income is proportional.But according...

Relative income hypothesis Introduction :- According to keynesian Current level of income determines the consumption of an individual and also society. He emphasised that absolute size of income determines the consumption. This theory is known as absolute income hypothesis .In this hypothesis, according to him, as income increases consumption...

ABSOLUTE INCOME HYPOTHESIS Introduction :- the consumption function was first introduced by John Maynard Keynes in 1936. His analysis is related to a simpler version of the consumption process that forms only the more quantitative aspect of his idea,which is popularly known as absolute income hypothesis (AIH). This theory,which puts forward...

Must read also- keynesian-theory-of-employment. The consumption function Introduction :-  Consumption function represents the functional relationship between total consumption and gross national income .It was introduced by the british economist John Maynard Keynes,in 1936. On the behalf of it's importance and its subjective and objective...

Keynesian Theory of Employment Introduction:-  Keynesian theory of employment depends upon effective demand. Effective demand is the situation where aggregate demand and aggregate supply equals to each other. Effective demand leads to increase in production and production creates income,then income creates employment. because of inter-relationship...