User Cost is the difference between the depreciation in the value of the machine when it is put to use and the depreciation which would occur if not in use plus the expenditure incurred on its maintenance and upkeep. Keynes’ concept of national income lies somewhat between the Gross National Product and the Net National Product.   First, it argued that government spending was a critical factor driving aggregate demand. In the General Theory Keynes explores one dimension of this — a tendency for investment to fall below the level needed for full employment — but this is just one instance of a broader theme in Keynes’s work — and in Keynesianism more broadly. Since consumption expenditures in the short run remain stable, Keynes’s theory stated in simple terms maintains that employment depends upon investment. On the other hand, a business cycle theory can be dated back to the mid-nineteenth century, when economics tried explaining the cycles of frequent and violent changes in economic activities (Snowdon & Vane 2002). In fact, monetary unit (money) had been employed usually as the standard of measurement. When most countries of the world were experiencing the gravest depression of the last two hundred years – that is, the so- called Great Depression of 1929-36-economists of the time faced a challenge in the problem of increasing unemployment, shrinking national income, falling prices and failing firms. The equilibrium level of income is determined at Rs. Investment multiplier (Income multiplier) expresses the relationship between an initial investment and the ultimate increase in national income. Pages 289-296. In this way by adding the user costs of all the firms in the whole economy, we get the aggregate user cost of the whole economy. with our fundamental theory of value. Influential economic factors include the overall price level, the interest rate, and the level of employment (or equivalently, of income/output measured in real terms). 60 crores. THE GENERAL THEORY OF EMPLOYMENT 211 modern monetary theory the propensity to hoard is generally dealt with, with results which in kind are substantially identi- cal with Keynes', as a factor operating to reduce the 'velocity' of money." In 1937 he suffered a severe heart attack . 1. Keynes himself measured these quantities in terms of money but found it rather unsatisfactory because with changes in prices, money does not depict true changes in the economic aggregate. Keynes’ General Theory tries to tackle exactly this problem. Propensity to consume refers to the actual consumption that takes place at different levels of income. Keynes, the story goes, figured out the causes of the Great Depression and in doing so revolutionized the field of economics. In other words, it shows that whatever people earn is being spent either on consumption or on investment. Consumption function is written as a schedule of various amounts of consumption expenditure that consumers will incur at different levels of income. Sound familiar? It is not always possible to predict the effects of policy changes adopted in the short run. His theory of interest depends upon it. Thus all ‘go’ periods tended to be followed by ‘stop’ periods and it became difficult to achieve long-term economic growth. John Maynard Keynes,The General Theory (BN Publishing, 2008), pp. 100 + Rs. It means disserving or accumulated-wealth consumption. He wanted to know the considerations that weigh with entrepreneurs when they decide to employ certain number of men. Keynes’s General Theory is a solution to a problem that does not exist, and Keynes himself clearly was a crank, which makes the praise which the General Theory has received in the corridors of power—though hardly unexpected—appalling, and the praise in academia, scandalous. These policies needed modification and moderation. Estimates are at best estimates and they can at times differ from the actual. 4. Even if the entrepreneurs wished he could not avoid this loss. He solved this problem in his own way. In Keynes’s view, fluctuations in the marginal efficiency of capital are the fundamental cause of the business cycle. Thus, according to Keynes, during a period of depression or recession encourage spending more to increase effective demand. The ‘General Theory’: The ‘General Theory’ is however, “cast mainly in terms of equilibrium analysis.” Keynes method, in much of the book, can indeed be described as comparative statics. Secondly, the Keynesian model failed to adequately take into account the problem of stagnation with inflation. The main problem with the Keynesian model was that it was meant for the short run. During depression he would advocate a deficit budget to stimulate effective demand and in times of inflation, he wanted the government to have a surplus budget to restrict effective demand. To guard against the risks of uncertain and vague future, people want to hold some of their assets in cash. It shows that an initial increase in investment increases the national income by a multiple of it. At income levels less than this, planned saving is much less than planned investment. Firstly, it was clear that a laissez-faire capitalist economy will not be able to maintain full employment even if it is attained. Great simplification of facts but it brings forth the crucial importance of investment in economics! 1936 Review of Keynes ’ s General Theory of employment, Interest money. 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