- John Maynard Keynes, the well known British economist of the 20th century wrote his seminal work-
The General Theory of Employment, Interest & Money during the great depression of the 1930s, in which he studied factors affecting output and growth in an economy
- Output (both goods and services) is decided by those with the purchasing power
- Basically, people who earn money with one hand and spend it with the other ultimately decide how much goods and services will be produced in the economy
- Fluctuation in spending or aggregate demand by this section consumers could result in short term fluctuations in output and employment
- Hence, firms will try to meet demand for goods and services at a ‘set’ price by altering the supply
The General Theory of Employment, Interest & Money during the great depression of the 1930s, in which he studied factors affecting output and growth in an economy
- Output (both goods and services) is decided by those with the purchasing power
- Basically, people who earn money with one hand and spend it with the other ultimately decide how much goods and services will be produced in the economy
- Fluctuation in spending or aggregate demand by this section consumers could result in short term fluctuations in output and employment
- Hence, firms will try to meet demand for goods and services at a ‘set’ price by altering the supply
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