ABSTRACT
John Maynard Keynes’s book The General Theory of Employment, Interest and Money aimed to “revolutionize the way the world thinks about its economic problems.” Keynes distinguishes between a real exchange economy and a monetary economy. In a real exchange economy, money is neutral and simply acts as means of exchange. This basic assumption supports the classical quantity theory of money. Keynes incorporates and develops many existing economic concepts in his text. He uses them to justify his overarching argument that contemporary understandings of the economy were incorrect. According to classical economics, as we have just seen, economies tend toward equilibrium and full employment in the long run, a view stemming from Say’s Law. Keynes restates Say’s Law in a different way, writing that “supply creates its own demand in the sense that the aggregate demand price is equal to the aggregate supply price for all levels of output and employment”.
