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
You have 300 right now. You invest into an account and 12 years later your investment will be 8 times of the initial investment. What the investment rate if a) The bank pays sim


THE AD CURVE SHIFT TO THE LEFT WHEN

Use the model in the tax incidence application to determine the effect of a given change in the tax on widget, change in T, on the equilibrium quantity of widgets. How does your an

Illustrate the problem for UK economic performance This is a foremost problem for UK economic performance and helps elucidate the persistent deficit on the current account of

Give an example of how the Principle of Opportunity Cost applies to your life. Think of a recent decision you made. It could be a decision as simple as whether to eat out or cook y

Q. Determine the Exchange rate? Exchange rate is determined by the ratio of domestic price level to the foreign price level. If, for instance domestic prices increase by 10% wh

1.    Estimating Women's Labor Supply a.    The following regression was run for an estimate of the current women's labor supply curve: Where h i = hours of labor suppl

ORDINAL THEORY: INDIFFERENCE CURVE APPROACH In indifference curve approach consumer is assumed to be rational, so that consumer's objective is to maximise her utility by choos

Compare Money with wealth and income Money isn't the same as wealth. An individual may be very wealthy however have no money (for instance by owning stocks and real estate). An