Keynes recognized that expectations played a major role in consumption decisions. In this context, Keynes (1936, p. 210) held that a decision to save (to forego current consumption) may not be assumed to be accompanied by an expectation of future consumption. Thus, according to Keynes, an act of saving will depress the price of consumption goods, and may also depress the marginal efficiency of existing capital. "In this event it may reduce present investmentdemand as well as present consumptiondemand" (Keynes, 1936, p. 210). Through this reasoning, Keynes recognized that expectations were important in making investment decisions. Expectations, thus, played a major role in Keynes' concept of the marginal efficiency of capital. More so than Marshall, Keynes (1936, pp. 150151) believed that aggregate investment is conditioned largely by profit expectations. While considering the role of expectations, Marshall (1920, pp. 302315) often tended to associate prices, costs, and economic decisions wit

Both Marshall and Keynes considered expectations in their formulations of economic theory. Keynes allowed expectations to play a much larger role than did Marshall. The chief difference between the two theorists (with respect to the role of expectations), however, is that Marshall felt that changes in expectations could be disregarded in the shortterm, while Keynes did not. Marshall's economic thought contributed to the development of Keynes' economic theory in areas other than expectations. Marshall founded "a tradition in partialequilibrium analysis" (Ekelund and Hebert, 1991, p. 457). Marshall also thought that monetary theory and value theory should be integrated. Marshall's supplyanddemand framework . . . provided for the first time a focus on the demand for money as well as its supply. In this respect Marshall's monetary economics is the spiritual father of the Keynesian theory of liquidity preference as well as the more modern formulation of the demand for money as a part of the general theory of asset choice" (Ekelund and Hebert, 1991, p. 457). Within this context, a primary area of disagreement between Keynes and the Cambridge economists whose though was influenced by Marshall was with respect to the reason that money is held in an economy. Keynes agreed that money was held for purposes of transactions, and that the transactions demand for money was related to income levels. Keynes contended, however, that reasons other than transactions existed for the holding of money. Keynes' liquidity preference theory, thus, was a major departure from the earlier theory.

Within Keynes' conception of longterm and shortterm expectations, the behavior of each individual firm in deciding its daily output will be determined by its shortterm expectations (Keynes, 1936, p. 47). In the case of additions to capital equipment, however, these shortterm