Publication: Journal of Economic Education
Volume: Volume 34, No. 4
Issue: Fall 2003
Pages: 333-340
Author(s): Paul Dalziel (Lincoln University) and Marc Lavoie (University of Ottawa)
Address (Principal Author):Paul Dalziel
Lincoln University
Ellesmere Road/Springs Road
P.O. Box 84
Lincoln
Canterbury
NEW ZEALAND
Phone: +64 (3) 325-3627
Fax: +64 (3) 325-3847
Internet Address (Principal Author): dalzielp@lincoln.ac.nz
Title: Teaching Keynes's Principle of Effective Demand Using the Aggregate Labor Market Diagram
Abstract: The authors suggest a way to teach Keynes's principle of effective demand using a standard aggregate labor market diagram that incorporates Kalecki's version of effective demand. They show Keynesian unemployment as a point on the aggregate labor demand curve inside the aggregate labor supply curve where workers and firms are unable to restore full employment by reducing real wages.
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