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