ISSN: IJSB: 2520-4750 (Online), 2521-3040 (Print) JSR : 2708-7085 (online)

The Role and Importance of Liquidity Preference, Marginal Efficiency of Capital, and Marginal Propensity to Consume in Keynes’s General Theory

 Author (s)

Usman Ghani & Md Kamal Hossain

Abstract

This article builds an understanding of Keynes’ General Theory as an advancement upon the Classical theory of economics with the introduction of new postulates including analysis of the propensity to consume, marginal efficiency of capital and the concept of the rate of interest. Based upon Keynesian General Theory, the key concepts, and variables of Liquidity Preference, Marginal Efficiency of Capital, and Marginal Propensity to Consume are familiarized and elaborated in terms of their role and importance in theory.  Different references have been cited to support the interpretations as originally presented in Keynes’s General Theory. Literature has widely discussed the vital postulates of Keynes on the principle of effective demand, the consumption function, multiplier and interest rate, interest rate and investment. These postulates take account of the subjected variables and elaborate on the importance of these in Keynes General theory and models. Furthermore, the criticism of General theory is discussed, and conclusions are drawn at the end of the article.

Keywords: Keynes General Theory, The Marginal Efficiency of Capital, Liquidity Preference, The Marginal Propensity to Consume.

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Title: The Role and Importance of Liquidity Preference, Marginal Efficiency of Capital, and Marginal Propensity to Consume in Keynes’s General Theory
Author: Usman Ghani & Md Kamal Hossain
Journal Name: International Journal of Science and Business
Website: ijsab.com
ISSN: ISSN 2520-4750 (Online), ISSN 2521-3040 (Print)
DOI: https://doi.org/10.58970/IJSB.2056
Media: Online
Volume: 20
Issue: 1
Issue publication (Year): 2023
Acceptance Date: 27/02/2023
Date of Publication: 09/03/2023
PDF URL: https://ijsab.com/wp-content/uploads/2056.pdf
Free download: Available
Page: 58-70
First Page: 58
Last Page: 70
Paper Type: Research paper
Current Status: Published

 

Cite This Article:

Usman Ghani & Md Kamal Hossain (2023). The Role and Importance of Liquidity Preference, Marginal Efficiency of Capital, and Marginal Propensity to Consume in Keynes’s General Theory. International Journal of Science and Business, 20(1), 58-70. doi: https://doi.org/ 10.5281/zenodo.7710633

Retrieved from https://ijsab.com/wp-content/uploads/2056.pdf

About Author (s)

Usman Ghani, Ph.D. candidate, Doctoral School of Regional and Economic Sciences (English), Széchenyi István University (University of Gyor), Hungary.

Md Kamal Hossain (corresponding author), Ph.D. candidate, Doctoral School of Regional and Economic Sciences (English), Széchenyi István University (University of Gyor), Hungary.

 

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DOI: https://doi.org/10.58970/IJSB.2056

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