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Concept of Determination of GDP in the Cross Model
In order to get determination of GDP in the cross model assignment help, we have to know what a Cross Model is.
The Keynesian cross diagram demonstrates the relationship between aggregate demand which is represented by the vertical axis and real GDP represented on the horizontal axis, which gives output.
Assumptions for determination of GDP in the Cross Model:
- The Cross Model has a positive curve because with an increase in national output, the income too will increase, which, consequently will lead to an increase in consumption.
- As long as there is a demand from any source, be it investment or consumer or government, the graph of Cross Model will take a positive and vertical intercept on the curve.
Impact of Cross Model on the GDP(Gross Domestic Product):
Consumption and investment has a proportionate relation with GDP.If the value of GDP increases by two times in a specific period of time, a similar trend will be followed in the increase of private consumption as well as investment, i.e. these will also increase by two times. A conclusion can be drawn that consumption grows in the same pattern as that of GDP.
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The result of the Cross Model:
The Cross model explores notions of deliberate expenditures as a purpose of the output. When plotted with the actual output line, the Keynesian Cross is obtained which helps us to think whether the economy is operating at its potential.
The question of importance, here, is whether the consumption exceeds its average when GDP too exceeds its average and also the other way round? The Keynes model gives the answer in affirmative, while the classical model denies the fact. What will you do in case of such a confusion? 24x7assignmenthelp.com solves these type of contradictions while providing help on determination of GDP in the Cross Model.
This is the gist of the determination of GDP in the Cross Model.
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