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THE KEYNESIAN THEORY OF CONSUMPTION FUNCTION
The theory was developed during the Great Depression which plagued Europe and America. During this time, there was excess capacity and idle resources and no effective demand i.e. people were unemployed and had no purchasing power. The determination of aggregate demand, then, was of crucial significance in Keynes analysis.
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Monetary policy The problems concerning the ability of monetary policy to influence the economy, as for instance the doubts about the ability of lower interest rates to st
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