Running Head: KEYNESIAN LAWS
The Keynesian laws as proposed by John Keynes pave the way for the Keynesian economy
and covered many aspects of the economy. It also brought radical changes to the previously Say’s
law that was widely accepted. The Keynes laws cover the areas such as consumption, expenditure,
inflation, fiscal policies and other economic issues. This paper will, therefore explores the theories
and laws proposed by John Keynes.
Law of consumption
Keynes proposed a psychological law consumption that suggested that the increase in the
income will directly lead to the increase in the consumption, however, this increase will not be
equal to the increase in the level of consumption. According to Keynes, the demand to consume is
determined by the increase in the income a community or a person gets. Provided there is an
aggregate in supply, the aggregate in demand will be determined by the level of income or
employment. This implies, therefore when there is a higher demand for consumption in the
community, there must be a greater level of employment or income. This law will also is applicable
in the opposite scenario, whereby the level of demand will go down if the level of income goes
down, irrespective of the level of supply. Keynes also kept in mi...