Lectures on John Maynard Keynes' General Theory of Employment, Interest and Money (3): Chapter 3, 'The Principle of Effective Demand'

University of Guelph Department of Economics and Finance Working Paper No. 2013-08

28 Pages Posted: 22 Aug 2013

See all articles by Brian S. Ferguson

Brian S. Ferguson

University of Guelph - Department of Economics

Date Written: July 21, 2013

Abstract

In Chapter 3 of the General Theory, Keynes sketches out what he calls the essence of the General Theory of Employment. He introduces the Keynesian expenditure-based model, the aggregate demand curve and also his aggregate supply function, a concept which spawned much debate among Post-Keynesian economists but which was, for a long time, virtually ignored in mainstream macroeconomics. He sets out the Savings=Investment version of Say’s Law and outlines how an economy can settle into an equilibrium at less than full employment.

Keywords: Keynes, General Theory, Keynesian Economics, Classical Economics, Aggregate Demand, Aggregate Supply, Unemployment Equilibrium, Say’s Law

JEL Classification: B10, B12, B13, B22, B31, E12, N12, N14

Suggested Citation

Ferguson, Brian S., Lectures on John Maynard Keynes' General Theory of Employment, Interest and Money (3): Chapter 3, 'The Principle of Effective Demand' (July 21, 2013). University of Guelph Department of Economics and Finance Working Paper No. 2013-08. Available at SSRN: https://ssrn.com/abstract=2313439 or http://dx.doi.org/10.2139/ssrn.2313439

Brian S. Ferguson (Contact Author)

University of Guelph - Department of Economics ( email )

50 Stone Road East
Guelph, Ontario N1G 2W1
Canada

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