Suppose all prices and the consumer's income change in the same direction and in the same proportion. What will be the effect of such a change on the equilibrium purchase plan of a consumer? The objective of the consumer is to maximise utility (u) subject to the budget constraint: Expenditure aggregated over all goods = income or, pixi = y. [...]
The upcoming discussion will update you about the difference between functional distribution and personal distribution. In the theory of distribution we are concerned with the functional distribution of income (i.e., how national income is divided among workers, landowners, capitalists) and not with the size distribution of income (i.e., whether the rich are getting richer and the poor poorer). The functional [...]
In this article we will discuss about the circular flow of income. National income refers to the aggregate, or total, income of the nation which results from economic activity. Income, however, depends upon how much output is produced and as output is a continuous process rather than a stock, we have to increase this output over a specified time period, [...]