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KEYNESIAN ECONOMICS: A school of thought developed by John Maynard Keynes built on the proposition that aggregate demand is the primary source of business cycle instability, especially recessions. The basic structure of Keynesian economics was initially presented in Keynes' book The General Theory of Employment, Interest, and Money, published in 1936. For the next forty years, the Keynesian school dominated the economics discipline and reached a pinnacle as a guide for federal government policy in the 1960s. It fell out of favor in the 1970s and 1980s, as monetarism, neoclassical economics, supply-side economics, and rational expectations became more widely accepted, but it still has a strong following in the academic and policy-making arenas.
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                           INTERCEPT, INVESTMENT LINE: The intercept of the investment line indicates autonomous investment, investment that does not depend on the level of income or production. This can be thought of as investment that the business sector undertakes regardless of the state of the economy. Autonomous investment is affected by the investment expenditures determinants, which cause a change in the intercept and a shift of the investment line. | Investment Line | 
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The investment line, also termed propensity-to-invest line or investment function, shows the relation between investment and income for the business sector. The income and production measures commonly used are national income and gross domestic product.A representative investment line is presented in the exhibit to the right. This red line, labeled I in the exhibit, is positively sloped, indicating that greater levels of income generate greater investment by the business sector. This positive relation indicates that the business sector is inclined to divert higher profits generated by an expanding economy to investment expenditures on capital goods. The investment line graphically illustrates the investment-income relation for the business sector, which is then added to the consumption line to derive the aggregate expenditures line used in Keynesian economics to identify equilibrium income and production. The intercept of the investment line indicates the intersection point between the investment line and the vertical investment axis. The investment line intersects the vertical axis at a value of $2 trillion. Theoretically, this is a minimum "baseline" level of investment, the amount of investment undertaken if income falls to zero. This intersection indicates autonomous investment--investment unrelated to income. Click the [Intercept] button to illustrate. Autonomous investment is investment by the business sector that is unrelated to and unaffected by the level of income or production. This is best indicated by a zero level of income. While individual businesses occasionally come face-to-face with autonomous investment, as their own slice of aggregate income drops to zero, for the aggregate economy autonomous investment is mostly an unlikely theoretical extrapolation. However, from an analytical perspective, the intercept of the investment line is affected by the investment expenditures determinants. These are ceteris paribus factors other than income that affect investment, but which are held constant when the investment line is constructed. Any change in these determinants cause the investment line to shift, which necessarily means a new intercept and a new level of autonomous investment.
Recommended Citation:INTERCEPT, INVESTMENT LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: June 26, 2022].
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The 1909 Lincoln penny was the first U.S. coin with the likeness of a U.S. President.
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