What is the impact of changes in autonomous consumption on equilibrium output in the Keynesian Cross model, assuming the consumption function is given by a specific equation?

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2026-07-26 07:45

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In the Keynesian Cross model, changes in autonomous consumption can affect equilibrium output. Autonomous consumption refers to the amount of consumption that occurs regardless of income levels. If autonomous consumption increases, it will shift the consumption function upwards, leading to higher equilibrium output. Conversely, if autonomous consumption decreases, it will shift the consumption function downwards, resulting in lower equilibrium output. The specific equation of the consumption function will determine the exact impact of changes in autonomous consumption on equilibrium output in the model.

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