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.

  1. 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?
  2. What is Keynes’ understanding of ‘human nature? How does this understanding explain his general perspective on the market economy?

Use words like:

  1. Uncertainty
  2. Expectations, long-term expectation
  3. Business psychology
  4. Investment

Liquidity, the stock market

Mass psychology

  1. Animal spirits
  2. The state

Your answers should show awareness that Keynes was criticizing the Neoclassical perspective.


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