Income on the horizontal axis at which the vertical distance to the 45-degree line is greater than the vertical distance to the Ep line gives rise to ________-than-equal planned expenditures,and so we must be ________ the equilibrium level of income.
A)less,below
B)less,above
C)greater,below
D)greater,above

Question

Quizplus · Accepted Answer

When the vertical distance to the 45-degree line is greater than the vertical distance to the Ep line, it indicates that planned expenditures are less than what they would be at the equilibrium (where the Ep line intersects the 45-degree line). This situation occurs when income is above the equilibrium level, as higher income levels without a corresponding increase in planned expenditures lead to a surplus.

Income on the Horizontal Axis at Which the Vertical Distance