Question

what isthe effective demand ? how will you derive the autonomous expenditure multiplier when the price of the final goods and the rate of the interest are given?​

Answer 1

Answer:

In economics, effective demand in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. It contrasts with notional demand, which is the demand that occurs when purchasers are not constrained in any other market.

Answer 2

Answer:

According to Keynesian theory, in short run the equilibrium level of income and employment is determined by the level of effective demand because aggregate supply or national income is assumed to be given and constant at that level. So, the autonomous expenditure multiplier is dependent on the income and MPC.