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Keynesian employment theory is based on the principle of effective demand. In other words, the level of employment in a capitalist economy depends on the level of effective demand.
Keynesians believe that changes in any component of spending, whether consumption, investment, or government spending, will change output because prices are somewhat sticky. For example, if government spending increases and all other spending factors remain constant, output will increase. Keynesian economics is based on the belief that aggregate demand and supply are determined by effective demand. Employment and income depend on effective demand. Some of the characteristics of Keynesian economics are Aggregate demand and aggregate supply determine effective demand. According to Keynes' own theory of income and employment:
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