Along the 45° reference line
A) consumption expenditures equal saving.
B) the relationship between consumption and income is represented.
C) the average propensity to consume is represented.
D) planned real expenditures equal real disposable income.

Question

Quizplus · Accepted Answer

The 45° reference line on a graph represents the point where planned real expenditures (which include consumption, investment, government spending, and net exports) equal real disposable income. This line is used in macroeconomic models to illustrate equilibrium where all output produced in an economy is purchased.

Along the 45° Reference Line