Edited by Robert W. Dimand and Harald Hagemann
Chapter 39: Investment, expectations and the marginal efficiency of capital
Keynes considered investment to be the most important and most volatile determinant of the level of economic activity because of the essential role of expectations in influencing the expenditure decisions of private corporations. He expressed the relationship between expectations of future income from investment and its current financing in the form of a concept he called the marginal efficiency of capital which covered both the supply price and the demand price of capital in relation to financial conditions.
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