Macroeconomics

Keynesian cross:

A simple model of income 

determination, based on the ideas in Keynes’s 

General  Theory, which shows how changes in 

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spending can have a multiplied effect on aggregate

income.

Keynesian model:

A model derived from the ideas

of Keynes’s General Theory; a model based on the

assumptions that wages and prices do not adjust to

clear markets and that aggregate demand determines

the economy’s output and employment. (Cf. classical

model.)

Labor-augmenting technological progress:

Advances in productive capability that raise the effi-

ciency of labor.

Labor force:

Those in the population who have a

job or are looking for a job.

Labor-force participation rate:

The percentage

of the adult population in the labor force.

Labor hoarding:

The phenomenon of firms em-

ploying workers whom they do not need when the

demand for their products is low, so that they will

still have these workers when demand recovers.