Why wait for the painful process of wagecuts to do something that can be done much more easily. We conclude that if there is relevance in keyness criticism of the classical theory, then a similar criticism can be directed at keyness own theory. According to keynes, the volume of employment in a country depends on the level of effective demand of people for goods and services. Keynes, if what we need to promote recovery is a lower interest rate, why not produce that evect directly, using expansionary monetary policy. Unemployment is attributed to the deficiency of effective demand. The principle of effective demand keynesian theory of. A corollary, thus, may be drawn that unemployment is due to a deficiency of total demand i. It is to be kept in mind that keynes theory is a short run theory when population, labour force, technology, etc. Donc, chez keynes, les decisions des entrepreneurs ne relevent pas. Keynes held that there may be some mechanisms that work in the.
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