When the aggregate expenditures function of a closed economy is plotted against real GDP, any point on the 45-degree line represents C + I + G = Y, where C = Consumption, I = Investment, G = Government spending, and Y = Real GDP.

Question

Quizplus · Accepted Answer

This is correct as the 45-degree line represents the points where real GDP equals aggregate expenditures, which is equal to C + I + G in a closed economy.

When the Aggregate Expenditures Function of a Closed Economy Is