Keynesian Cross Diagram

Initializing live version
Download to Desktop

Requires a Wolfram Notebook System

Interact on desktop, mobile and cloud with the free Wolfram Player or other Wolfram Language products.

Samuelson's Keynesian cross diagram is an attempt to capture the essence of Keynes' theory of effective demand. The blue line represents aggregate expenditure on domestically produced goods and services. Of all the components of aggregate expenditure, only the level of consumption is assumed to be a function of income; the other components are assumed to be autonomous. The red line expresses the accounting identity that aggregate expenditure is equal to national income. The model shows that a change in autonomous expenditure leads to a larger-sized change in national income, a relationship known as the multiplier effect.

Contributed by: Fiona Maclachlan (March 2011)
Open content licensed under CC BY-NC-SA




Feedback (field required)
Email (field required) Name
Occupation Organization
Note: Your message & contact information may be shared with the author of any specific Demonstration for which you give feedback.