246 THE GENERAL THEORY OF EMPLOYMENT bk. iv

our independent variables, but do not completely deter-mine them. For example, the schedule of the marginalefficiency of capital depends partly on the existingquantity of equipment which is one of the given factors,but partly on the state of long-term expectation whichcannot be inferred from the given factors. But thereare certain other elements which the given factors deter-mine so completely that we can treat these derivativesas being themselves given. For example, the givenfactors allow us to infer what level of national incomemeasured in terms of the wage-unit will correspond toany given level of employment; so that, within theeconomic framework which we take as given, thenational income depends on the volume of employment,i.e. on the quantity of effort currently devoted to pro-duction, in the sense that there is a unique correlationbetween the two . 1 Furthermore, they allow us to inferthe shape of the aggregate supply functions, whichembody the -physical conditions of supply, for differenttypes of products;—that is to say, the quantity ofemployment which will be devoted to production cor-responding to any given level of effective demandmeasured in terms of wage-units. Finally, they furnish

us with the supply function of labour (or effort); so thatthey tell us inter alia at what point the employmentfunction 2 for labour as a whole will cease to be elastic.

The schedule of the marginal efficiency of capitaldepends, however, partly on the given factors andpartly on the prospective yield of capital-assets ofdifferent kinds; whilst the rate of interest dependspartly on the state of liquidity-preference (i.e. on theliquidity function) and partly on the quantity of moneymeasured in terms of wage-units. Thus we can some-times regard our ultimate independent variables as con-sisting of (i) the three fundamental psychological

1 We are ignoring at this stage certain complications which arise whenthe employment functions of different products have different curvatureswithin the relevant range of employment. See Chapter 20 below.

2 Defined in Chapter 20 below.