This preview shows page 1. Sign up to view the full content.
Unformatted text preview: The correction of Keynesian Cross Model:
In our model, Where b is the intercept and c is the slope.
In the case of two sample economies, they have different slope. The first economy has a steeper slope then the second economy. When the government
purchase increases, the intercept b increases, say it increase by 5 units. So the change in output in the first economy is bigger than the second economy due to their
slope difference. ...
View Full Document
- Summer '09