The Keynesian cross model attributes differences between actual output and planned expenditure to
A) unintended inventory accumulation or depletion
B) buffer stocks resulting from risk-averse decision-making regarding production
C) taxes
D) net exports
E) the diminishing marginal product of capital

Question

Quizplus · Accepted Answer

The Keynesian cross model is based on the idea that actual equilibrium output is determined by the intersection of aggregate expenditure (AE) and aggregate output (Y) in which any difference between the two will either result in unintended inventory accumulation or depletion. Thus, option A is the correct answer.

The Keynesian Cross Model Attributes Differences Between Actual Output and Planned