On a Keynesian cross diagram, the 45 degree line connects all points where consumption spending would be equal to national income.

Question

Quizplus · Accepted Answer

The 45 degree line represents where national income equals aggregate expenditure (which includes consumption spending, investment, government spending, and net exports), not just consumption spending alone. However, at points where the 45 degree line intersects with the AE curve, consumption spending would indeed be equal to national income.

On a Keynesian Cross Diagram, the 45 Degree Line Connects