Question

According to Keynes, effective demand is ______.

Options

• Any desire to buy goods

• Only the demand for consumer goods

• The value of aggregate demand where it equals aggregate supply

• The demand at full employment only

Answer 1

According to Keynes, effective demand is the value of aggregate demand where it equals aggregate supply.

Explanation: 

Keynes defines effective demand as that value of aggregate demand at which the aggregate demand function intersects the aggregate supply function.