ABSTRACT
The counteractuals which are considered need not be policies which were recommended at the time, though these are historically more interesting. It is also worth considering how such proposals might have been modified to achieve a specific goal. Keynes emphasized that high interest rates were an additional reason for low levels of domestic spending and employment, a view which has received some support in recent research. An implication of the rise in income and expenditure would be a rise in import demand and hence the improvement in the balance of payments due to expenditure switching would be partially offset and the final change in the balance of payments somewhat smaller. It has sometimes been argued that any attempt to revive the economy either by manipulating the exchange rate or expanding public expenditure would have run into serious economic constraints which would have limited or completely undermined the effects on employment.
