Macroeconomics › Section L · The Keynesian perspective › Topic L.1
Aggregate demand in Keynesian analysis
John Maynard Keynes put spending at the centre of macroeconomics: firms only produce what they expect to sell. To use his framework, you need to know what drives each of the four kinds of spending that make up aggregate demand.
In this topic
- Output follows spending
- The Keynesian AD/AS picture
- Four components of spending
- What drives consumption
- What drives investment
- Government spending and net exports
- Worked example: sorting the shocks
- Worked example: measuring a recessionary gap
- The Keynesian policy message
- Common mistakes to avoid
- Key takeaways
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