Page 79 - DECO402_Macro Economics

Macroeconomic Theory

Notes 8.3 Summary
y The second part of Dussenberry principle, “The hypothesis of ‘past peak of income’ that
describes the short period ups and down in consumption function and disclaimers the
assumption of Keynes that consumption relation is not permanent. The establishment of that
hypothesis is that consumption will increases during the period of prosperity and slowly-
slowly it will adjust on more high status.

8.4 Keywords

y Adjust—Regulate.
y Recovery—improvement.

8.5 Review Questions

1. What do you understand by the relative income hypothesis?
2. Criticized the relative income hypothesis.

Answers: Self Assessment
1. Keynes 2. free 3. unchanged 4. (a)
5. (b) 6. (c) 7. True 8. True
9. True 10. False

8.6 Further Readings

Books 1. Necessity of Macroeconomics- H. S. Nath, Sayber Tech Publications,
2012.
2. Macroeconomics- S.K. Chakravarti, Himalaya Publishing House, 2010.
3. Macroeconomics: Economic Growth, Fluctuations and Policy- Robert E.
Hall and David H. PaiPal, Vaina Books, 2010.
4. Microeconomics: Theory and Policy: H.L. Ahuja, S. Chand Publisher,
2010.

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