In the Keynesian aggregate expenditure graph (Figure 5-5)(in the text),the 45 degree line is meant to indicate that:
A)planned aggregate expenditure always equals aggregate income.
B)savings must equal investment.
C)actual aggregate expenditure must equal aggregate income.
D)actual income must equal planned income.
E)none of the above.

Question

Quizplus · Accepted Answer

The 45-degree line in the Keynesian aggregate expenditure model represents the points where actual aggregate expenditure equals aggregate income, indicating equilibrium in the economy.

In the Keynesian Aggregate Expenditure Graph (Figure 5-5)(in the Text),the