ABSTRACT
IN the preceding chapter we considered the income propagation mechanism on the simplifying assumption that only the non-induced, autonomous variety of investment was to work with induced consumption expenditure. We shall now drop this assumption and introduce induced investment as an explicit variable in our income system. Introduction of induced investment will be found to intensify the amplitude of income-employment fluctuations, for reasons to be analysed subsequently. Specifically this chapter will analyse the super-multiplier mechanism involving the ‘Three Musketeers’ of autonomous investment, consumption expenditure, and induced investment.
