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Keynesian Economics According to John Maynard Keynes: in the short-run, the level of GDP is determined primarily by demand.
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Keynesian Consumption Function
The relationship between consumer spending and income, in the short-run, has two parts: C = Ca + by C = Consumption Spending; Ca = Autonomous Consumption Spending; b = Marginal Propensity to Consume; and y = Level of Income.
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Keynesian Saving Function
The relationship between the level of saving and the level of income, in the short-run, is: S = - Ca + (1 - b)y S = Consumer Saving; Ca = Autonomous Consumption Spending; 1 - b = Marginal Propensity to Save; and y = Level of Income.
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