Using the output at which the aggregate expenditure curve intersects the 45-degree line,we can identify
A)Equilibrium (macro)at the intersection point.
B)Dissaving to the right of the intersection point.
C)Full employment to the left of the intersection point if there is a recessionary gap.
D)A consumption shortfall at the intersection point.

Question

Quizplus · Accepted Answer

The intersection point between the aggregate expenditure curve and the 45-degree line represents the level of output at which aggregate demand (AD) equals aggregate supply (AS). This is known as the macroeconomic equilibrium point. Therefore, choice A is correct. However, choices B, C, and D are not correct because they do not accurately describe the relationship between the aggregate expenditure curve and the 45-degree line at the intersection point.

Using the Output at Which the Aggregate Expenditure Curve Intersects