Keynesian Cross Model. This is where the name keynesian cross comes from because essentially you have planned expenditures and then right over here you have the equilibrium line or what i call the equilibrium line because these are all points where income is equal to expenditure. From the 1930s until the 1970s keynesian economics was usually explained with a different model known as the expenditure output approach.
Imagine an economy with the following characteristics. The keynesian cross diagram is a formulation of the central ideas in keynes general theory. This is where the name keynesian cross comes from because essentially you have planned expenditures and then right over here you have the equilibrium line or what i call the equilibrium line because these are all points where income is equal to expenditure.
The keynesian cross plots aggregate income and planned total spending or aggregate expenditure.
During this depression a steep decline in economic activities was experienced. The keynesian model has as its origin the writings of john maynard keynes in the 1930s particularly the book the general theory of employment interest and money. W p are constant and r is endogenous. From the 1930s until the 1970s keynesian economics was usually explained with a different model known as the expenditure output approach.
