In the Keynesian cross diagram, the 45-degree line represents the short-run equilibrium condition that:
A)Y = PAE.
B)PAE = C + I ᵖ ⁺ ᴳ ⁺ ᴺˣ.
C)I ≠ I ᵖ.
D)Y* = Y.

Name: In the Keynesian cross diagram, the 45-degree line represents the short-run equilibrium condition that: A)Y = PAE. B)PAE = C + I ᵖ ⁺ ᴳ ⁺ ᴺˣ. C)I ≠ I ᵖ. D)Y* = Y.
Brand: Quizplus
Rating: 4.9 (42 reviews)

Question

Quizplus · Accepted Answer

The 45-degree line is the set of all possible equilibrium points. This is where output equals planned aggregate expenditure, or Y = PAE.

In the Keynesian Cross Diagram, the 45-Degree Line Represents the Short-Run