On the 45-degree line diagram, for points that lie below the 45-degree line,
A)planned aggregate expenditure is greater than GDP.
B)planned aggregate expenditure is less than GDP.
C)planned aggregate expenditure is equal to GDP.
D)planned aggregate expenditure is less than aggregate income.
E)planned investment is less than unplanned investment.

Question

Quizplus · Accepted Answer

The 45-degree line represents the equality between GDP and planned aggregate expenditure. Points below the line indicate that planned aggregate expenditure is less than GDP, which implies that there is unplanned inventory accumulation.

On the 45-Degree Line Diagram, for Points That Lie Below