Keynes stressed the importance of effective demand which is
A) when business firms are effective in convincing consumers that they have a demand for certain goods.
B) when consumers have the desire for goods and services as well as the income to purchase these goods.
C) when the demand for goods and services is effective in satisfying individuals desires.
D) when aggregate demand is less than aggregate supply.

Question

Quizplus · Accepted Answer

Keynes emphasized that effective demand is when consumers have both the willingness and ability to buy goods and services. This is important because if there is not enough effective demand, businesses will not produce enough goods and services, leading to unemployment and an economic downturn. Option A is incorrect because it focuses on the business's ability to convince consumers to buy their goods, which is not the same as effective demand. Option C is incorrect because it only focuses on the individual's satisfaction, not the overall demand for goods and services. Option D is incorrect because it incorrectly defines effective demand as being less than aggregate supply, rather than being a specific type of aggregate demand.

Keynes Stressed the Importance of Effective Demand Which Is