Expectations influence economic outcomes from "summary" of The General Theory of Employment, Interest, and Money by John Maynard Keynes
The level of employment in an economy is significantly influenced by the expectations of individuals and businesses regarding future economic conditions. When people believe that the future will be prosperous, they are more likely to spend money and invest in businesses, leading to increased economic activity and higher levels of employment. On the other hand, if individuals and businesses have pessimistic expectations about the future, they are more likely to save money and reduce spending, which can lead to a decrease in economic activity and higher levels of unemployment. Expectations also play a crucial role in determining interest rates in an economy. When people expect interest rates to rise in the future, they are more likely to borrow money at lower rates in the present t...
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