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KEYNESIAN: Relating to the macroeconomic theory developed by John Maynard Keynes to address the problem of the persistently high unemployment occurring during the Great Depression. This word is commonly used as a modifier for other terms, such as Keynesian economics, Keynesian policy, or Keynesian equilibrium. Beyond the theory itself, the term Keynesian has come to reflect a particular philosophy toward government and the economy that a market-based economy is unlikely to achieve the macroeconomic goals of full employment, growth, and stability without the active use of government policies.
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                           INVESTMENT LINE: A graphical depiction of the relation between investment expenditures by the business sector and the economy's aggregate level of income or production. This relation plays a key role in the study of Keynesian economics. A investment line is characterized by vertical intercept, which indicates autonomous investment, and slope, which is the marginal propensity to invest and indicates induced investment. The aggregate expenditures line used in Keynesian economics is derived by adding or stacking the investment line onto the consumption line, then adding government purchases and net exports to this stack. The investment line, also termed propensity-to-invest line, shows the relation between investment expenditures by the business sector and aggregate income or production. The income and production measures most commonly used are national income and gross domestic product. The purpose of the investment line is to graphically illustrate the investment-income relation for the business sector, which is then integrated into the aggregate expenditures line used in Keynesian economics.The investment line is commonly presented in one of two forms reflecting autonomous investment and induced investment. The simplest is a horizontal investment line, one with a zero slope, that illustrates autonomous investment. With a horizontal line, investment expenditures are constant for all levels of aggregate income or production, hence autonomous and unaffected by income. A more realistic investment line is positively sloped, indicating a degree of induced investment. In this case, the vertical intercept, or Y-intercept, of the investment line marks autonomous investment and the slope represents induced investment. Of no small importance, the slope of the investment line is also the marginal propensity to invest (MPI). | Investment Line | 
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The horizontal red line, labeled I in the exhibit to the right, indicates investment that is completely autonomous. There is no induced investment indicated by this line. The slope of the investment line is zero (MPI = 0). The intercept of this horizontal line indicates autonomous investment, which is $2 trillion in this case.An alternative investment line, one with induced investment, can be illustrated in the exhibit with a simple click of the [An Induced Line] button. The new red line, labeled I' in the exhibit, is positively sloped, indicating that a change in the level of income or production induces a change in investment expenditures. This new investment line actually indicates both induced investment and autonomous investment. The slope is induced investment and the intercept is autonomous investment. - Slope: The slope of this new investment line is positive, but less than one. In this case the slope is equal to 0.10, a $1 change in aggregate income or production induces a $0.10 change in investment expenditures. This positive slope indicates induced investment. Moreover, the slope of the line is also the marginal propensity to invest (MPI).
- Intercept: This new investment line, like the original line, intersects the vertical axis at a positive value of $2 trillion. And once again this indicates autonomous investment.
Recommended Citation:INVESTMENT LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: April 11, 2021].
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GDI
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