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.