The Keynesian Approach
Keynes’ analysis was greatly influenced by the inter-war depression, with its unprecedented mass unemployment. As we have seen, the Classical theory could offer no solution except that of cutting wage-rates. How could the economic system (supposedly designed to alleviate the problem of scarcity) result in such poverty and misery?
KeywordsAggregate Demand Full Employment Closed Economy Investment Expenditure Effective Demand
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