Question

Describe the mechanism by which demand creates its own supply.

Short answer

Demand is an economic theory that refers to a consumer's desire to buy products and services as well as their readiness to pay a price for them.

Step-by-step solution

Demand

Demand is an economic theory that refers to a consumer's desire to buy products and services as well as their readiness to pay a price for them.

Explanation

Keynes' theory of income, output, and employment is based on the principle of "effective demand." It is based on a short-run theory. He felt that there is no such thing as complete employment. Cyclical unemployment will always present. This happens when you're depressed. He claimed that such unemployment was caused by a shortage of capital resources rather than a lack of effective demand.