Describe keynesian cross model, Macroeconomics

Assignment Help:

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.


Related Discussions:- Describe keynesian cross model

Define effective exchange rate, Q. Define Effective exchange rate? Supp...

Q. Define Effective exchange rate? Suppose that we are interested in external competitiveness of a country, let's say Japan. To do this we could look at evolution of a particul

Trade in services, TRADE IN SERVICES: India had objected to  the  incl...

TRADE IN SERVICES: India had objected to  the  inclusion of  trade in services  in  the agreement for  the UR  negotiations. The  Indian negotiations continued to raise object

Long-run framework, In the long-run framework, budget surpluses: A. should ...

In the long-run framework, budget surpluses: A. should be run on a permanent basis since they boost saving and investment and stimulate economic growth. B. should be run whenever o

Solow model in large open economies, In a large open economy, if the econom...

In a large open economy, if the economy has a fiscal expansion, what would happen in the solow model?

Average cost of capital, Suppose a firm raises $23 million dollars by issui...

Suppose a firm raises $23 million dollars by issuing debt at a cost of 6.1%, raises $14 million by issuing common stock at a cost of 8.6% and raises an additional $10 million by is

Two replacement compressor, You need to choose between two replacement comp...

You need to choose between two replacement compressor options. One costs $6400 and is 70% efficient. The other costs $9800 and is 85% efficient. Both have an average life of 8 year

Calculate asset turnover, The following information has been extracted from...

The following information has been extracted from the recently published accounts of Noddy Plc:                           Balance sheet as at 31 st May

Increase in its expenditures by selling bonds to the public, If a governmen...

If a government finances an increase in its expenditures by selling bonds to the public, then the aggregate demand curve will: A. not shift. B. shift out more if crowding out occur

What is use of long-run average total cost curve in output, What is the use...

What is the use of long-run average total cost curve in the producing output? The long-run average total cost curve demonstrates the relationship in between output and average t

Is-lm model, what is Y = C(Y,T) + G + I(r)

what is Y = C(Y,T) + G + I(r)

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd