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Keynesian Perspective - Aggregate Demand

What is the Keynesian Perspective of Aggregate Demand?

Written by Jason Gordon

Updated at March 20th, 2023

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What is the Keynesian Perspective of Aggregate Demand? 

The Keynesian perspective focuses on aggregate demand. The idea is simple: firms produce output only if they expect it to sell. Thus, while the availability of the factors of production determines a nation’s potential GDP, the amount of goods and services that actually sell, known as real GDP, depends on how much demand exists across the economy.

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