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Apply the Keynesian Cross model to analyze how falling house prices and tighter consumer credit conditions in the UK may cause the UK macro-economy to go into recession. We should analysis how falling house prices and tighter consumer credit conditions in the UK may cause the UK macro-economy to go into recession. About the Keynesian cross model, that is an essential tool for understanding macro-economic trends, the causes of macro-economic instability and assessing appropriate business strategy. It is also useful for evaluating Government policy responses, a theme taken up again in later Units. And one of the most important theoretical insights of Keynes was that the volume of National Expenditure determines the level of National Income and Product. Changes in aggregate income and output are, therefore, due to changes in National Expenditure. Consequently the Keynesian Cross model focuses on National Expenditure, and the components which make up National Expenditure, to show the equilibrium levels of National Income and National Product

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