21.2 Equilibrium National Income FIGURE 21-3
-Refer to Figure 21-3.All points along the 45-degree line represent
A)combinations of desired aggregate expenditure and actual national income where consumption expenditure equals saving.
B)the equilibrium condition that desired aggregate expenditure equals actual national income.
C)levels of actual national income where desired AE is equal to the sum of desired consumption and desired investment.
D)levels of actual national income that occur when autonomous expenditure is increasing at a constant (linear)rate.
E)levels of actual national income where desired saving is equal to zero.

Question

21.2 Equilibrium National Income  FIGURE 21-3
-Refer to Figure 21-3.All points along the 45-degree line represent
A)combinations of desired aggregate expenditure and actual national income where consumption expenditure equals saving. 
B)the equilibrium condition that desired aggregate expenditure equals actual national income. 
C)levels of actual national income where desired AE is equal to the sum of desired consumption and desired investment. 
D)levels of actual national income that occur when autonomous expenditure is increasing at a constant (linear)rate. 
E)levels of actual national income where desired saving is equal to zero.

Quizplus · Accepted Answer

Points along the 45-degree line represent the equilibrium condition where desired aggregate expenditure (AE) equals actual national income (Y), which means that production and expenditure are in balance. The 45-degree line represents all the points where Y = AE, which is the definition of equilibrium in the Keynesian model. Therefore, choice B is the correct answer. Choice A is incorrect because it only refers to the equality between consumption and saving, but does not capture the idea of equilibrium. Choice C refers to the equality between desired AE and the sum of desired consumption and desired investment, but it does not address the concept of equilibrium explicitly. Choice D is incorrect because it refers to autonomous expenditure, which is not related to the 45-degree line. Choice E is also incorrect because it suggests that desired saving is always zero, which is not the case.