Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 3 Theories of Employment and Income Notes
→ Keynes challenged the classical economic theory regarding the merits of state intervention in markets and led to widespread shift in both economic theory and government policies worldwide in the post World War II period.
→ Full employment refers to a situation in which every able bodied person who is willing to work at the prevailing wage rate, is employed.
→ Every economy in the world aims at attaining the level of full employment equilibrium where all its available resources are fully and efficiently employed to achieve maximum level of output.
→ Unemployment is problem faced when there are people, who are willing to work and able to work but cannot find suitable jobs.
→ In developing countries like India, the nature of unemployment is different from that of developed countries.
→ Full employment: Persons who are willing to work and able to work must have employment or a job.
→ Unemployment: when there are people, who are willing to work and able to work but cannot find suitable jobs.
→ Disguised unemployment: It is found in which when more people are doing work than actually required.
→ Under employment: Resources (e.g. Labour) are not fully utilized in production.
→ Effective demand: The amount of money which entrepreneurs expect to get by the output product.
→ Aggregate demand: The amount that households, firms, the governments and the foreign purchasers would like to spend on domestic output.
→ Aggregate supply: The value of total output of goods and services produced in an economy in a year.
→ Marginal Propensity to Consume: The additional consumption due to an additional unit of income.
→ Marginal Efficiency of Capital: The expected rate of return over costs of a new capital good.
→ Money supply: The total stock of money circulating in an economy.