Keynesian Cross Equilibrium. The keynesian cross and solving for equilibrium also known as the 45 degree line jeff keynesian macroeconomics sometimes you can be asked to find the equilibrium value from the keynesian cross or the 45 degree line. We begin with a plot of the aggregate demand function with respect to real gnp y in the adjoining diagram.
Imagine an economy with the following characteristics. Real gnp y is plotted along the horizontal axis and aggregate demand is measured along the vertical axis. First the ad blue curve is positive.
Real gnp y is plotted along the horizontal axis and aggregate demand is measured along the vertical axis.
The expenditure output or keynesian cross model the fundamental ideas of keynesian economics were developed before the aggregate demand aggregate supply or ad as model was popularized. Given algebraic equations for two lines the point where they cross can be readily calculated. The keynesian cross diagram the keynesian cross diagram depicts the equilibrium level of national income in the g s market model. Y real gdp or national income.
