In his General Theory, Keynes launched what we now recognise as macroeconomics. He switched the focus of economic analysis from decisions made by individuals and households to the relationship between economic aggregates. This followed the so-called Great Depression, when unemployment rose to unprecedented levels, which Keynes partly attributed to what he saw as impotent government policies.
Classical economists had believed in Say’s Law, which argued that supply would create its own demand. Keynes argued that this would not always happen, and that in aggregate, the level of demand in the economy could be inadequate, resulting in unemployment. This could be countered by finding a way of stimulating aggregate demand.
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