On the 45 degree-line diagram,the 45 degree line shows points where
A)real income equals real GDP.
B)real aggregate expenditure equals C + I.
C)real aggregate expenditure equals real GDP.
D)real aggregate output equals the quantity produced.

Question

Quizplus · Accepted Answer

The 45 degree line on the diagram shows points where real aggregate expenditure equals real GDP. This is because the line represents a scenario where all output is being spent on goods and services within the economy, resulting in no surplus or deficit. Points above or below the line represent a difference between expenditure and output, indicating either a surplus or a deficit. Therefore, choice C is the best answer.

On the 45 Degree-Line Diagram,the 45 Degree Line Shows Points