Effective request
the effective request is a concept of economy
definition
The Law of Say not being valid, the contractors must adapt at the request of the households. Also, in a climate of uncertainty, they establish their forecasts of sale, and thus their level of production on the request which is addressed to them: the effective request.
determination of the effective request
The global offer is an increasing function of the level of employment.
- The global offer translates volume of production necessary to the companies to cover their costs due to employment. Keynes considers that the global offer depends only on production capacities and that it is stable in short period.
The total request is a decreasing function of the level of employment.
- The total request expresses the production wished starting from a certain volume of employment and breaks up into request for consumption and investment.
The effective request makes it possible the companies to employ L hard-working. If there remains unemployment, it is seen that an increase in the total request allows a level of higher employment has L and thus a reduction of unemployment.
Thus the volume of employment depend on the effective request, it is necessary to highlight the explanatory factors of the components of the total request, i.e. the most significant variables in the determination of consumption and the investment.
See too
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