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The purpose of Keynesian employment theory is to offer a solution to periods of excessive unemployment (i.e. recession). This solution is tied to the idea that employment depends on what firms need to produce, and their production level, in turn, depends on what individuals and firms plan to buy: this is what Keynes calls aggregate expenditure.
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During the great depression, people were afraid to spend. Businesses were reluctant to hire workers because they could not expect any pick up in sales. This was especially true for key sectors of the economy such as automobile purchases. |
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