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Keynesian unemployment


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Unemployment due to lack of effective demand for goods and services which people could have been employed to produce. Keynesian unemployment can be reduced by the use of monetary or fiscal policy to increase effective demand. Keynesian unemployment is distinct from classical unemployment, where wage rates are too high relative to productivity for employment to be profitable, and structural unemployment, where the unemployed lack the skills needed by prospective employers, or firms do not have the equipment needed to take on more workers.

Subjects: Economics.


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