Keynesian Revolution Quiz

The General Theory of Employment, Interest and Money

• The General Theory is a book that challenged classical economic thought and introduced new concepts that revolutionized economic policy.

Contributions to Economic Thought

• The General Theory contributed to economic thought by introducing new concepts, challenging classical assumptions, and providing a new perspective on economic policy.

Central Argument and Main Theory

• The central argument of The General Theory is presented in Chapter 3, where Keynes presents his main theory of employment, interest, and money.
• The main focus of Book I: Introduction is to introduce the concept of the general theory.

Challenges to Classical Theory

• Keynes denied that the economy is in equilibrium and challenged the classical theory's assumption that the economic society is self-adjusting.
• The General Theory attacked the classical theory's assumption that the economy is always at full employment.

New Concepts and Emphasis

• The General Theory introduced new concepts, including the importance of aggregate demand, the role of government intervention, and the concept of liquidity preference.
• By placing the prefix "general" in the title, Keynes emphasized that his theory was a general theory, applicable to all economic societies.

Tone and Impact

• The tone of Keynes's book is radical, as seen in the first chapter, which sets the tone for the rest of the book.
• Keynes predicted that his book would revolutionize the way the world thinks about its economic problems, and indeed it had a significant impact on economic policy.
• The title "The General Theory of Employment, Interest and Money" was chosen to contrast with classical theory and emphasize the general applicability of Keynes's theory.