Welcome

This interactive tool lets you explore the macroeconomic model of aggregate demand, (sometimes called the Keynesian Cross) developed in Block 2 of DD209. You can choose between two versions of an economy:

• A closed economy without government

• A closed economy with government

Closed economy without government

Type values in the boxes below and then press Calculate to explore the impact on the level of output (income) of changes to planned saving and planned investment. The economy is in equilibrium when output, Y, equals the full-employment output level, Yf.

Closed economy with government

Type values in the boxes below and then press Calculate to explore the impact on the economy of changes to planned saving, planned investment and fiscal policy. The economy is in equilibrium when output, Y, equals the full-employment output level, Yf.