Effective demand critical in economic policy from "summary" of The General Theory of Employment, Interest, and Money by John Maynard Keynes
Effective demand plays a crucial role in the formulation and implementation of economic policy. It is the driving force behind economic activity, as it represents the desire and ability of consumers to purchase goods and services in the market. When effective demand is high, businesses are encouraged to produce more to meet the demand, leading to increased employment and economic growth. Conversely, when effective demand is low, businesses are reluctant to produce more, leading to unemployment and economic stagnation. In the context of economic policy, it is essential to focus on stimulating effective demand to ensure a healthy and vibrant economy. Policies that boost consumer spending, such as tax cuts or increased government spending, can help increase effective demand and stimulate economic activity. By increasing effective demand, policymakers can create a virtuous cycle of...
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