In Chapter 3, Section 1, Keynes explains the concept of effective demand as the point where, as functions of volume of employment, the aggregate demand price matches the aggregate supply price. So long as the aggregate demand price (the price consumers/purchasers are willing to pay for the output of production) exceeds the aggregate supply price (the price the entrepreneur expects to receive), the entrepreneur will be motivated to scale up operations in terms of volume of employment.
Keynes distinguishes his conceptualization of effective demand from the suppositions of the classical theory, in that the latter tacitly assumes that the aggregate demand price will always coincide with the aggregate supply price, resulting in an arrangement where the entrepreneurs’ liberty to scale up the volume of production is limited only by the constraints pf the marginal disutility of labor, which, according to Keynes, tends to exceed real wages as employment volume increases, due to the inverse relation between real wages and employment (see Chapter 2, Section V)