Describe keynesian cross model, Macroeconomics

Q. Describe Keynesian cross model?

Keynesian cross model is a simple version of what we call the 'complete Keynesian model' or simply the Keynesian model. Keynesian model has as its origin the writings of John Maynard Keynes in the 1930s, specifically the book 'The general theory of Employment, Interest, and Money'. Though this book was written as a criticism of the classical model, similarities between Keynesian model and classical model are definitely greater than the differences. Let's point out the three most significant differences directly: 

  • Say's Law doesn't apply in the Keynesian model.
  • the quantity theory of money doesn't apply in the Keynesian model.
  • the nominal wage level W is an exogenous variable in Keynesian model.

Remember that W being exogenous means that it's pre-determined outside the model. It doesn't necessarily mean that it's constant over time - even though this is a common assumption. Though the nominal wage should be known at any point in time in this model. To simplify our description of Keynesian model, we will begin by presuming that W is constant.

Posted Date: 8/14/2013 2:35:12 AM | Location : United States







Related Discussions:- Describe keynesian cross model, Assignment Help, Ask Question on Describe keynesian cross model, Get Answer, Expert's Help, Describe keynesian cross model Discussions

Write discussion on Describe keynesian cross model
Your posts are moderated
Related Questions
The aggregate production function Definition Imagine the national economy during a short period of time (say one week). We refer:  L: total amount of work used duri

Explain how inflation unemployment trade off is not feasible under adaptive expectations?

Q. Explain the Says Law? GDP, and Say's Law Aggregate supply Y S = f(L, K) in the classical model where L is concluded in the labor market while K is

If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate? (b) How many years would it take for GDP (gross domestic product) to double (using your answer fr

why does the price level not enter desire consumption, investment and net exports of the desired aggregate expenditure function in the keynesian cross model

In The No-Trade Equilibrium Stormlands: WageL = 24 WageW = ? MPLL = 4 MPLW = ? PL = ? PW = 4 Reach: Wage*L = ? Wage*W = 6 MPL*L = ? MPL*W = 1 P*L = 3 P*W = ? (a) Which

how useful is national income statistics for indicating living standards

Over the past few years there has been much concern about falling housing prices, and some policy makers have argued that the government should put a floor under prices so that the

A major component of the costs of many large firms  is the cost associated with ordering and holding inventory. If the yearly demand for the good is  D and the size of each order p

What factors shift out the PPC and what is the opportunity cost of the economy moving out to get back on the PPC? Explain?