Answer to Question #259692 in Macroeconomics for lovely

Question

In Keynesian macroeconomic framework, how do factors other than income affect consumption and investment? Can multiplier effect be significant if Keynesian Psychological Law is violated under some circumstances?

Answer 1

These aren't quantitative or specific in the same way that economic considerations are. Consumption is motivated by delight, short-sightedness, generosity, miscalculation, extravagance, and ostentation, according to Keynes. In the short term, however, these factors do not change considerably.In Keynesian theory of income, output, and employment, the term "multiplier" plays an essential role. The initial rise in investment, according to Keynes, multiplies the eventual income by many times. To the relationship between a rise in initial investment and an increase in total income.