ABSTRACT
John Maynard Keynes' was able to show that, given the community's propensity to consume, the level of employment will depend on the volume of current investment. Keynes indicates the importance of investment as a means of offsetting savings. Employment can only increase pari passu with an increase in investment. The key to the employment problem in terms of the Keynesian analysis is to be found in an ever-increasing volume of investment activity. Keynes explains this by saying that the richer the community, the greater will be the margin between its consumption and its potential production and, therefore, the greater the urgency for finding new investment projects. According to Keynes, the rate of investment will be pushed to the point on the investment demand schedule where the marginal efficiency of capital just offsets the going rate of interest. In Keynes theory of employment, when the level of employment increases, aggregate real income is also increased.
