As used in the income-expenditure diagram in macroeconomics, the 45 degree line:
A) shows all the points at which spending and real income are equal.
B) contains only a consumption component.
C) represents consumption plus planned investment.
D) shows those income levels where the marginal propensity to save is 1.

Question

Quizplus · Accepted Answer

The 45-degree line in an income-expenditure diagram represents all the points where aggregate expenditure equals total output or income, indicating where spending and real income are equal.

As Used in the Income-Expenditure Diagram in Macroeconomics, the 45