Keynes, John Maynard. 1936. The General Theory of Employment, Interest and Money. Chapters 8 through 10.
Reading suggestions
There is very little math in these chapters, but that does not make them easy reading! Keynes uses terminology that was non-standard in his day, and even some of the standard terminology of the 1930s is archaic today.
You may refer to other chapters of the book for clarification if you think that is helpful.
Questions for analysis
Compare and contrast Keynes's theory of consumption with the neoclassical theory embedded in the Ramsey growth model. What elements of the neoclassical theory are included in the "objective" and "subjective" factors? How do the two approaches differ in their analysis of the effect of a change in current income on current consumption?
How would/could you fit Keynes's model into the framework of aggregate demand and aggregate supply? On which of these does he focus and what assumptions does he make to largely neglect the other?
Keynes was writing in the middle of the Great Depression. What elements of his theory are "depression-specific"? Why might these not apply to an economy operating near full employment?
Discuss the policy implications that Keynes draws in the last two pages of Chapter 10. Would Keynes have been surprised that the unemployment rate in the United States failed to return to pre-Depression levels until the onset of World War II? What advice would be give President Obama today?