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Chapter 11: 17 (page 291)

What is Keynes鈥� law?

Short Answer

Expert verified

Keynes鈥� law states that demand creates its own supply.

Step by step solution

01

Concept introduction

Aggregate demand is the total demand for all commodities by various entities in an economy.

02

Explanation

Keynes鈥� law was based on the short-run perception of consumers who demand the products in the economy. As the economy's need grows, so will the supply of goods, and it will be advantageous for manufacturers to offer items in response to the rising demand. Any aggregate demand would have an impact on price levels and output.

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