Demand management key to economic stability from "summary" of The General Theory of Employment, Interest, and Money by John Maynard Keynes
The level of effective demand, which is the sum of consumption and investment, plays a crucial role in determining the level of employment and output in an economy. If aggregate demand falls short of the potential level of output that the economy is capable of producing, there will be involuntary unemployment. In such a situation, the economy is said to be in a state of disequilibrium. When there is inadequate aggregate demand, businesses produce less, leading to a decrease in output and employment. This, in turn, reduces incomes and further diminishes aggregate demand, creating a vicious cycle of declining economic activity. To break this cycle and achieve full employment, it is essential to manage and stabilize aggregate demand through various policy interventions. Demand managem...
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