Final answer:
The statement that the level of employment is determined by aggregate demand is true according to Keynesian economics. Keynes saw the government's role as stabilizing aggregate demand to ensure full employment, without directly controlling markets.
Step-by-step explanation:
According to Keynesian economics, the statement that the level of employment is determined by the level of aggregate demand for goods and services is true. John Maynard Keynes, a pivotal figure in economics, emphasized that the health of the overall economy, particularly the level of employment, is heavily influenced by aggregate demand. If aggregate demand is too low, not all willing and able workers can find employment, resulting in unemployment. Conversely, too much aggregate demand can lead to inflation. Thus, achieving a balanced level of aggregate demand is essential for economic stability and full employment.
Keynes also believed that individual markets are generally effective at allocating resources among those who are employed, but that the overall economy may still suffer from insufficient demand to provide jobs for everyone who is willing and able to work. Hence, Keynesian economics suggests that it is the government's role to help stabilize aggregate demand, not through direct control of individual markets but rather through fiscal and monetary policy measures to influence overall spending in the economy.