The question asks which among the listed factors were neglected by Keynes in his theory of employment. To answer this, we need to understand the main components of Keynesian economic theory, especially as proposed in his seminal work, "The General Theory of Employment, Interest, and Money." Let's analyze the options provided:
- Role of Expectations: Keynes emphasized the importance of expectations in affecting investment and consumption. His concept of "animal spirits" refers to the instincts and emotions that influence human behavior and decision-making, particularly in investing.
- Role of Capital Stock: Keynes paid little attention to the role of capital stock in his theory. He focused more on aggregate demand, consumption, and investment in determining employment rather than on the physical capital assets available in the economy.
- Role of Consumption: Consumption is a central element in Keynes's theory. He formulated the consumption function, which describes the relationship between income and consumption, highlighting its impact on aggregate demand and employment.
- Role of Government: Keynes placed significant emphasis on the role of government intervention to manage economic cycles, especially through fiscal policy, to influence aggregate demand and employment.
After understanding the key components of Keynesian theory, it's clear that the Role of Capital Stock was indeed given less emphasis. Thus, the correct answer is:
Role of Capital Stock
This neglect is because Keynes was more concerned with short-term economic fluctuations and believed that the immediate factors influencing employment were demand-side factors like consumption and investment, rather than the long-term supply-side factors such as the stock of capital.
Important Questions from Macroeconomics
- A less elastic IS curve means that :
- In Keynesian framework, at full employment, which of the following is/are true ?
(a) Supply curve in the short period is inelastic.
(b) The supply is influenced by the increase in the quantity of money.
Select the answer from the code given below : - When LM curve is vertical, which one of the following is correct ? An increase in money supply will lead to :
- Crowding out will emerge in the economy, if :
- Which of the propositions of the past income hypothesis of Duesenberry are correct ? Choose from the code below :
Statements :
I. The current consumption is a function of not only current income, but also the past income.
II. There is asymmetrical relationship between income and consumption during contraction and expansion.
III. Consumption income relationship is irreversible.
IV. Consumption falls less than income during depression, but the rise in consumption is much more during expansion.
Codes :
