Archive | Keynesian Theory of Income and Employment

Let us learn about the Keynes’ Theory of Employment. Keynes' Theory of Employment: The Concept of Effective Demand: According to classicists, there will always be full employment in a free enterprise capitalist economy because of the operation of Say's Law and wage-price flexibility. This classical theory came under severe attack during the Great Depression years of 1930s at the hands [...]

Everything you need to know about the Keynesian Theory of Income and Employment! Total Spending and Economic Activity: Basically, expansions and contractions in economic activity, or changes in real output, are caused by changes in total, or aggregate, spending. Total, or aggregate, spending refers to the total spending for all new goods and services by households, businesses, govern­ment units, and [...]