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Macro by Mark

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© 2026 Mark Jayson Nation

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Theory-Based Models

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Keynesian Cross
Model

The 45-degree line model where planned expenditure E = C + I + G intersects the identity line Y = E to determine short-run equilibrium output. The gap between spending and income drives inventory adjustment until the two converge.

What level of output equates planned spending to actual income?

Composition

YYY
Output

Real output (income) in short-run equilibrium.

EEE
Planned expenditure

Total planned spending: consumption plus investmen...

AEAEAE
Autonomous expenditure

The portion of spending that does not depend on cu...

GraphProofCompare

Short Run Equilibrium

Equilibrium output

600.0

Multiplier

4.00

Autonomous expenditure

150.0