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Saving equals investment according to Keynes

In "The General Theory of Employment, Interest and Money", Chapter 6 The Definition of Income Saving and Investment, John Maynard Keynes says: Income = value of output = consumption + ...
santos82h's user avatar
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The marginal propensity to consume and the multiplier according to Keynes

In "The General Theory of Employment, Interest and Money", Chapter 10: The marginal propensity to consume and the multiplier, John Maynard Keynes says: Our normal psychological law that, ...
santos82h's user avatar
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Means of increasing employment in classical economics according to Keynes

In The General Theory of Employment, Interest and Money, Chapter 2: The postulates of the classical economics, John Maynard ...
santos82h's user avatar
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1 answer
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What is meant by "marginal disutility of labor" in Keynes General Theory

Sorry for the newby question, started reading Keynes general theory (1936) and am confused by this paragraph in Chapter 2: The traditional theory maintains, in short, that the wage bargains between ...
psychomantis01's user avatar
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Why do Austrians oppose market failure and demand management as policy rationales?

Predominantly free market and small government, albeit with room for redistrbution and funding of health care and education, Austrians stress the planning fallacy, emergent order, and incentives ...
Landjo's user avatar
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2 votes
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Difference between interest rate and rate of return (Keynes)

For Keynes the economy's interest rate is defined from the equality between money supply and demand. However, he also defines the rate of return on assets (which in equilibrium would all be equal). ...
Felipe Morelli's user avatar
1 vote
2 answers
196 views

Why is the multiplicator effect considered stronger if money is handed out to poor people rather than the well off?

Frequently, extra handout to poor people during economic crisis is motivated by the multiplier effect. The reasoning goes something like this: since the recipients are poor they will consume the extra ...
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Do Keynesian policies always lead to stagflation mandating austerity?

Did 1970's stagflation completely refute Keynesian economics leading to a permanent shift to Neoliberalism ? Why have all subsequence economic policies been about centering society around markets with ...
Ash Rivers's user avatar
6 votes
2 answers
596 views

Keynes' conception of investment

Keynes defines saving as equal to investment, saying: "Having now defined both income and consumption, the definition of saving, which is the excess of income over consumption, naturally follows ....
H Huang's user avatar
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1 vote
0 answers
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How is there full employment level at equilibrium level according to Keynesian theory(AD-AS approach)?

According to Keynesian theory :- Equilibrium level is the point at which Aggregate Demand curve intersects Aggregate Supply curve . And this point is termed as Full Employment Level How do we ...
JIM's user avatar
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1 answer
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When can one read the general theory of employment,interest and money?

I am a first-year undergrad econ student and was interested in reading Keynes' book. in the preface, Keynes pointed out that the text deals in the abstract and is meant for his fellow economists. ...
NoLifeKing's user avatar
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Keynesian model: large and small economies equilibrium

When a large economy adopts a contractionary fiscal policy, for example, and the exchange rates are mobile, there will be a devaluation in the local currency - but there will be no full return (of the ...
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Roosevelt’s Price Fixing in The Great Depression

Why didn’t Roosevelt’s method of fixing prices on labour and produce help the depression? If everyone was receiving a wage that allowed them to afford produce, wouldn’t that create a new equilibrium ...
Dominic Lee-Lindsay's user avatar
3 votes
3 answers
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Expected values vs uncertainty

Most models I have seen use expected values. Why is this a better economic model than uncertainty and economic agents thus having to make 'best guesses', with the result of 'animal spirits' playing a ...
riemann_lebesgue's user avatar
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1 answer
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What are the assumptions of real business cycle theory and Keynesian theory?

What are the differences between the approaches of Keynes and Real Business Cycle theorists? What are the assumptions made by both the theories? How do they differ in their methodology? Do they ...
Ishan Kashyap Hazarika's user avatar
5 votes
2 answers
259 views

What is the logic behind this sentence in Keynes's General Theory?

It seems hard for me to understand the underlying logic of this sentence in Chapter 2 of this book: They do not seem to have realised that, unless the supply of labour is a function of real wages ...
twoyoung's user avatar
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3 answers
6k views

How does an increase in the price of "non-wage-goods" increase employment?

Keynes (1936, Chapter 2) says that based on the classical theory, "there are only four possible means of increasing employment", the fourth of which is: an increase in the price of non-wage-goods ...
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1 answer
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How do the wages affect the employment

If we have a condition where employment is lead by the wages does it mean that a wage reduction will cause unemployment?
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Keynesian consumption law not applicable in USA ?

I was looking at some numbers and saw that in USA in 2010 consumption was at 70% but savings were close to zero and that even places were there is high income savings are still low while the keynesian ...
Amr El Aswar's user avatar
1 vote
0 answers
3k views

IS-LM Effect of Change in Consumer Confidence

What is the effect of government reforms (unspecified) that decrease customer's confidence about their future wages (analysed using the IS-LM model)? I think that less confidence about future wages ...
Padster's user avatar
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21 votes
3 answers
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In what sense are "new-Keynesian" models "new" and in what sense are they "Keynesian"?

Hopefully, the title of this question is quite descriptive. Whilst I have a broad understanding of the research agenda of macroeconomics, I don't have a very good picture of how it is divided into ...
Ubiquitous's user avatar