ABSTRACT

This chapter is concerned with the theoretical problem of maintaining full employment, once a condition of equilibrium at full employment has been established. The purpose in the chapter is to explore the kind of measures that could be effective and not to evaluate or recommend such measures. It will be assumed that money can enter or leave the economic system through the action of either the banking system or government but not otherwise. In what follows, the major possible changes in pattern on the part of each group that could lead to under or overemployment will be considered separately. Changes in the pattern of behavior of the aggregate of individuals will be considered first, followed by that of business investment companies, banks, and finally government. Attention will be focused in the chapter only on the preventive action and specifically offsetting action.