What Is The Keynesian Law Of Consumption?


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The Keynesian Law of Consumption was put forward by John Maynard Keynes. He presented this theory in the year 1936.

According to his idea, the aggregate demand for goods is insufficient during the times of economic downturn. It leads to unnecessarily high unemployment and loss of potential output.

He was of the view that Government policies can be used to increase aggregate demand, which would increase the economic activities and reduce the high unemployment condition and deflation.

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