Principles of Macroeconomics / Unit 9 MAC 0801 short lesson, about 20 seconds
Firms Produce What They Expect to Sell
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The idea
Keynes started from what firms do: they produce what they expect to sell. In the short run, spending decides output. Potential GDP sets the ceiling, but output can sit below it.
In practice
A factory with idle machines and idle workers produces less because orders fell, not because anything changed.
Where people slip
This reverses unit five's logic, where supply sets output. Both hold, on different horizons.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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