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Chapter 11: Q. 2. (page 291)

Describe the mechanism by which demand creates its own supply.

Short Answer

Expert verified

Demand is an economic theory that refers to a consumer's desire to buy products and services as well as their readiness to pay a price for them.

Step by step solution

01

Demand

Demand is an economic theory that refers to a consumer's desire to buy products and services as well as their readiness to pay a price for them.

02

Explanation

Keynes' theory of income, output, and employment is based on the principle of "effective demand." It is based on a short-run theory. He felt that there is no such thing as complete employment. Cyclical unemployment will always present. This happens when you're depressed. He claimed that such unemployment was caused by a shortage of capital resources rather than a lack of effective demand.

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Most popular questions from this chapter

What is Keynes鈥� law?

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Name some factors that could cause the SRAS curve to shift, and say whether they would shift SRAS to the right or to the left.

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