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PART (A): Keynesian model of based on th e ideas of Keynes ashis explanation for the cause of the Great Depression. Thebasis of the Keynesian theory is that the actions of individuals and firms in an economy when aggregated canlead to macro-economic outcomes. This is because the aggregate income is equal to aggregate expenditures inan economy. This basis is premised on the logic that every individuals income is an expenditure of another individual . Thereare two categories of investment. The first category is expenditure for consumption and the other category isexpenditure for investment. Thus the equation below can be derivedIncome = consumption + investment When Aggregated for and economy the equation becomesNational I ncome = aggregate consumption + aggregate investment.Further according to Keynesian theory aggregate consumption is fixed by the consumption habits of theconsumers. So if the consumers consume 80 percent of their income the savings are 20 percent and thereforethese two factors are passive functions of income. This means both investment and consumptionexpenditure are determined by income, thus if ( passive ) expenditures are 80 percent of income our equationbecomesIncome = independent expenditure + Passive expenditure as passive expenditure is 80% of income our equationbecomesIncome= independent expenditure + 80%