The two major curves or lines in the TE-TP diagram are:
A) the total expenditure curve and the 45-degree line.
B) the supply and demand curves.
C) the total expenditures and national income curves.
D) the total production and national income curves.

Question

Quizplus · Accepted Answer

The TE-TP (total expenditure-total production) diagram plots the relationship between total expenditure and total production or national income. The two major curves or lines in the diagram are the total expenditure curve, which shows the relationship between total expenditures and national income, and the 45-degree line, which represents the level of national income where output and expenditure are equal. Therefore, the correct option is A, the total expenditure curve, and the 45-degree line.

The Two Major Curves or Lines in the TE-TP Diagram