If an economy is operating at a point on the C + I line that lies below the 45-degree line
A) the economy is in equilibrium.
B) the C + I line shifts down.
C) GDP will rise.
D) unwanted inventories will accumulate.
E) intended saving equals intended investment.

Question

Quizplus · Accepted Answer

When an economy is operating at a point on the C + I (consumption + investment) line that lies below the 45-degree line (which represents the equality of output and spending), it implies that spending is less than output. This will result in unwanted inventories accumulating because producers will not be able to sell all their output. This will eventually lead to a decrease in production and GDP.

If an Economy Is Operating at a Point on the C