Source must be used: J. M. Keynes, ” Chapter 12 The State of Long-Term Expectation,” from his book The General Theory of Employment, Interest, and Money.
- What role did Keynes assign to the state (government) in a market economy? What is his justification for this role? In other words, what should the state do, and why?
- What is Keynes’ understanding of ‘human nature? How does this understanding explain his general perspective on the market economy?
Use words like:
- Expectations, long-term expectation
- Business psychology
Liquidity, the stock market
- Animal spirits
- The state
Your answers should show awareness that Keynes was criticizing the Neoclassical perspective.