... as an alternative to classical theory. His vision of how the economy works quickly became a center of controversy. Yet as economists debated The General Theory, a new understanding of economic fluctuations gradually developed. In The general Theory, Keynes proposed that an economy's total income be, in the short run, determined largely by the desire to spend by households, firms and the government. The problem during recessions and depressions, according to Keynes was inadequate spending. The Keynesian cross is an attempt to model this insight. In 1937 John Hicks introduced the IS-LM model which generally represents Keynes's General Theory in the form of a system of simultaneous equations. A problem was that it was unable to obtain the keynesian result of an "unemployment equilibrium" and tended to yield the neo classical result of "full employment". In order to generate an "unemployment equilibrium" as a solution to this system of equations, ...

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