On the 45° line diagram, the 45° line shows points such that:
A)real income equals real GDP.
B)real aggregate expenditure equals C + I.
C)real aggregate expenditure equals real GDP.
D)real aggregate output equals the quantity produced.

Question

Quizplus · Accepted Answer

The 45° line on the diagram represents the points where real aggregate expenditure (which is the sum of consumption, investment, government spending, and net exports adjusted for inflation) equals real GDP (which is the total value of goods and services produced in an economy adjusted for inflation). Therefore, choice (C) is the correct answer.

On the 45° Line Diagram, the 45° Line Shows Points