The Theory of Income Determination
As a result of our work in Chapter 11 we now have a theory of the determination of the equilibrium rate of interest. Our elementary model is thus complete. It is therefore convenient at this point to summarise our argument: that is, to display in full the characteristics of the model at this stage. Once this is done we can proceed (i) to see where the model needs further extensions, and (ii) to see what predictions it yields.
KeywordsInterest Rate Money Supply Real Income Good Market Equilibrium Level
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