John Maynard Keynes

Born June 5, 1883 in Cambridge, England and was the most influential British economist of the 20th century

father of macroeconomics and introduced Keynesian principles to the world that created a revolution in economic thinking with its unconventional approach

An economic theory of total spending in the economy and its effects on output and inflation.

Sometimes referred to as "depression economics," as Keynes' famous book, "The General Theory of Employment, Interest and Money" was written during a time of deep depression, not only in his native land of the United Kingdom but worldwide.

If the current level of aggregate expenditure is not sufficient to purchase all of the real GDP supplied, output will be cut back until the level of real GDP is equal to the level of aggregate expenditure.

If the current level of aggregate expenditure is not sufficient to purchase the natural level of real GDP, then the equilibrium level of real GDP will lie somewhere below the natural level.

Keynesians, however, believe that prices and wages are not so flexible. They believe that prices and wages are _____, especially downward.

The ______ of prices and wages in the downward direction prevents the economy's resources from being fully employed and thereby prevents the economy from returning to the natural level of real GDP.