1 The Keynesian Cross A simple closed economy model in which income is determined by expenditure.(due to J.M.Keynes) ▣Notation: I planned investment E=C+I+G planned expenditure Y=real GDP=actual expenditure Difference between actual planned expenditure: unplanned inventory investment CHAPTER 10 Aggregate Demand I slide 5 CHAPTER 10 Aggregate Demand I slide 5 The Keynesian Cross ▪ A simple closed economy model in which income is determined by expenditure. (due to J.M. Keynes) ▪ Notation: I = planned investment E = C + I + G = planned expenditure Y = real GDP = actual expenditure ▪ Difference between actual & planned expenditure: unplanned inventory investment 1