Keynesian Argument
The first problem was a failure to consider the effects of money on prices. This deficiency was corrected by Alfred Marshall in his formulation of economic theory. The second problem was the absence of consistent emphasis the role of expectations in economic decisions. More than any economic theorist before him, Keynes corrected this situation by incorporating the concept of expectations in a major way into much of his theory.

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

    Some topics in this essay  
    Marshall Keynes | Keynes Cambridge | KEYNESIAN ARGUMENT | Alfred Marshall | Keynes Marshall | Ekelund Hebert | Keynes Marshall's | keynes 1936 | economic theory | Hebert Robert | shortterm expectations | Limited Marshall | marshall 1920 | Company Keynes | longterm expectations | expectations marshall | role expectations | liquidity preference | demand money | changes expectations | changes shortterm expectations | expectations marshall 1920 | keynes recognized expectations | real income level | expectations played major |  
    Get Better Grades!  
    Saved Papers  
    Save your essays here so you can locate them quickly!  
"It's nice to be able to find information so quickly and easily."
Jillian T.
"I enjoy reading other writers papers to get their perspective on things. It makes writing my own paper so much easier."
Cindy A.
"I've used this site for 2 semesters and I'll be back next year for sure!"
Liz R.
"This site rocks! I got an A thanks to you helping with my writers block."
Sara B.
"I was in a real bind and your site helped me to come up with ideas for my paper."
Brian T.
Copyright © 1999 - 2014 All Rights Reserved. DMCA