Macro Aspect

· Main characteristic of Trade cycle
1. Formed by two contrary forces of expansion and contraction are follow the other
2. These forces occur at regular interval
3. Crisis are always present in a trade cycle
4. Change from upward to downward is faster
5. Trade cycle occur in organized and money economies
6. Its may be regional, national and international


· National Income
National income is the sum total of money value of all good and services produced in a country during a given period
A view of economist”
Marshall - is a aggregate of a good and services produces during a year.
Piqou - The national income dividend is that part of the objective income of the commodity including income derived from abroad which can measure in money.
Fisher - The national dividend or income consist solely of services as receive by ultimate consumer, weather from the material or from their human environment.
Marshall - The labor and capital of country acting upon it natural resources produced annually a certain net aggregate of commodities.

· A concept of national income
1. Gross National Income / Product and Net National Income
2. National Income at market price and at factor price
3. Net National Income at factor price and Net Domestic Income
4. Personal Income and Disposable Personal Income
- or –
1. GNP / P & NNI
2. NI at market price & factor price
3. NNI at factor cost & NDI
4. PI & DPI

· Measure of National Income
1. Income method or National Income
a. Labor income
b. Mixed income
c. Rental income
d. Cooperate income
e. Income from interest
2. Product method
3. Final expenditure methods
a. Personal consumption expenditure
b. Gross domestic private investment
c. Government expenditure
d. Net foreign investment



· Significant of Multiplier
- It is important theorical concept
- It is explained the different phase of business cycle.

Limitation of Multiplier
1. Sufficient availability of consumption goods
2. Maintainance of investment cycle regularly
3. Multiplier period (there is a time gap between increase in income and increase in investment)
4. Net increase in investment
5. Multiplier will not work at full employment ceiling
6. Existence of closed economy Viz. no import export trade
7. No investment from induced consumption

Leakage of Multiplier are due to –
1. Shaving
2. Debt collection
3. Import
4. Price inflation
5. Liquidity preference
6. Purchase of old stock and security
7. Taxes and corporation saving

Classical theory of Employment
The classical theory is based on the nation that supply always creates its own demand it is know as Say’s law of market