According of Keynes, the level of employment is determined by ?
Correct answer: D. the level of aggregate demand for goods and services
- A. the behaviour of trade unions.
- B. the quantity of money
- C. price and wages
- D. the level of aggregate demand for goods and services
Explanation
Keynes argued that firms employ workers according to expected sales, so employment is governed by effective aggregate demand for goods and services. Money, wages and trade-union behaviour can influence demand, but they are not the primary determinant in the Keynesian explanation.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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