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
SUPPOSE MR.CHANSA DEPOSIT HIS MONEY INTO BANK-B,HOW WOULD THE T-BALANCE SHEET LOOK LIKE FOR BANK-B

with help of is-lm technique explain the process of integration of money market and goods market by way of keynesian approach


How does Opportunity cost and production possibilities relate?

Explain about economic cycle The economic cycle is a period of approximately 6 or 7 years in which the economy completes a cycle of downturn, recovery, recession, and boom. A p

A normal population has a mean of 12.2 and a standard deviation of 2.5. A) Compute the Z value associated with 14.3. B) What proportion of the population is between 12.2 and 14.3.?

A firm's current profits are $1,300,000. These profits are expected to grow indefinitely at a constant annual rate of 3 percent. If the firm's opportunity cost of funds is 6 percen

Store of value - Economic functions of money If you are a fisherman and have a temporary surplus of fish that you want to store for the future, storing the fish might not b

Consider the market for the trusty widget (the most common good in the world if economics textbooks are to be believed). Assume that the market is perfectly competitive. Suppose th

Suppose that a grocery store buys milk for $2.10 and sells it for $2.60. If the milk gets old then the grocery store can sell their unsold milk back to their wholesaler for $0.60 (