This chapter presents an analytical argument on the imperfectionist interpretations of John Maynard Keynes’ theory of output and employment. It provides essential ingredients of a framework for demonstrating the manner in which the classical theory of value may be compatible with Keynes’s principle of effective demand. The chapter concludes with a discussion of the relationship between the long run and the short run in the analysis of output and employment; the change in the notion of equilibrium in modern neoclassical theory; the treatment of uncertainty and expectations; and the relationship between macroeconomics and microeconomics.
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