Preface: This book is the product of some fourteen years of teaching a semester course-"The National Income"-at the University of Michigan. It is hard to say at what point I began writing this book, but mimeographed parts of it have been used in the course since at least 1955. The course is elected, in about equal proportions, by advanced under- graduates and first-year graduate students, and the text is therefore aimed at this group. However, considerable flexibility of student level is pro- vided in that many more specialized and difficult portions are placed in chapter appendices which may be omitted without damage to continuity. Also, the last three chapters, which contain the most advanced material, can be eliminated in a purely undergraduate course. Some instructors might prefer to omit Chapters IV and XI, which can be done without interfering with the argument. Flexibility is further allowed by the use of related readings. Students, in my course, purchase J. M. Keynes, General Theory of Employment, Interest and Money, of which all chapters except 4, 6, 14, 16, 22, and 23 are assigned. A considerable selection from the vast post-Keynesian litera- ture is also assigned or given as additional reference. My strong view is that, although Keynes' classic is quite unsatisfactory as a textbook, it should be carefully read by every serious student of economics. I have tried to make my course, and therefore this book, primarily theoretical. To be sure, in teaching one attempts to develop the relevance of the theory to the diagnosis of current economic conditions and to current discussions of public policy. It is possible that this book could be used in a course which focusses primary attention upon such applications. In this case, it should be supplemented not by further readings in theory but by the Economic Reports of the President, and similar policy-oriented materials. Although this book is primarily theoretical, there has been no hesitation at some points to introduce empirical matters. Note particularly the dis- cussion of the consumption function (there is also some empirical discus- sion of the aggregate production function). One might complain that I have not introduced equivalent empirical (or at least statistical) discus- sion in connection with other topics, particularly investment. My defense would have to be that the consumption function is at the heart of modern macroeconomics; that investment theory is in less adequate shape for em- pirical testing; and that, in any case, while an introductory course in theory should surely introduce the student to the relation of theory and fact it need not attempt to test every proposition. There is very little in this book that is original, nor should there be. Still, when writing a book such as this, it would be quite impossible that one "should not secretly cherish the belief that he has made some trifling modifications in economic analysis which seem to partake of the nature of contributions. However, it is not worthwhile to give these more specific comment. If such modifications are of any significance the fair-minded student will note the fact; if not, the less said about them the better.". My intellectual debt to J. M. Keynes, like that of all students of my generation, is unmistakable. Yet this book tries to be much more than another "Guide to Keynes." I am impressed that Keynes' work represents more an extension than a revolution of "Classical" ideas and the tide of post-Keynesian literature has carried macroeconomics far beyond the high-water mark of Keynes' own great contribution. Certain sections in this book incorporate excerpts from my previous publications, as follows: "A Third Approach to the Analysis and Control of Inflation," which first appeared in The Relationship of Prices to Eco- nomic Stability and Growth: Compendium of Papers Submitted by Pan- elists Appearing before the Joint Economic Committee, March 31, 1958, is incorporated with considerable changes in Chapter XVI. Similarly, in Chapter XIX, I have incorporated passages, with minor alterations, from "The Wealth-Saving Relationship," which first appeared in Journal of Political Economy, LIX (April 1951). In Chapter XX, brief excerpts appear from The Keynesian Analysis of Italian Economic Problems," first published in the Banca Nazionale del Lavoro Quarterly Review, September 1957. I am grateful to the University of Chicago Press and the Banca Nazionale del Lavoro, publishers of the two journals, for permis sion to use these materials. I am also grateful to the Survey Research Center of the University of Michigan for permission to use the chart which appears on page 293. To Howard S. Ellis, my first teacher of theory, is due my interest in theory and a passion for analytical rigor. Others whose inspiration I feel compelled to acknowledge are former teachers, E. M. Hoover, Jr., Leon- ard L. Watkins, Z. Clark Dickinson, I. L. Sharfman, and Arthur Smithies. Colleagues who have given both stimulus and invaluable assistance are Richard A. Musgrave, Daniel B. Suits, Warren L. Smith, George Katona, and James N. Morgan. Professor Henry Oliver, of Indiana University, read the entire manuscript, and made numerous extremely helpful sug- gestions. Hundreds of students have permitted me to sharpen my ideas on them, but I should particularly acknowledge the help of former stu- dents William P. Yohe, Heinz Köhler, and Enrique Jarabo-Paya, who have served as assistants with parts of the writing. Further, I am grateful to the Ford Foundation for research help; to the Conference Board of Asso- ciated Research Councils and the U. S. Department of State for a Ful- bright year during which some of this writing was done in Rome; to the secretarial staff of the Department of Economics, University of Michigan, and particularly to Mrs. Evelyn Uhlendorf, for the efficient typing of in- terminable drafts. Finally, I must acknowledge the patience of my wife and family; and the academic environment provided by the University of Michigan. Without all of these, this book would have been impossible. Gardner Ackley. (ÖNSÖZ)