Keynesian Cross Model Formula. Given algebraic equations for two lines the point where they cross can be readily calculated. Gdp 87 25 15 23 5 06 1 725.
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Gdp 94 gdp 25 87 15 25. Given algebraic equations for two lines the point where they cross can be readily calculated. 1 1 mpc 1 1 0 5 2.
Now add up the terms on the right hand side then divide both sides by 06 to get.
According to the theory the net effect is greater than the dollar amount spent by the. Now add up the terms on the right hand side then divide both sides by 06 to get. The value of mpc allows us to calculate the size of the multiplier using the formula. With this relationship in mind consider the relationship among income consumption and savings shown in figure 2.
