In the Keynesian cross diagram,the point at which the aggregate demand function crosses the 45 degree line indicates the
A)level of full employment income.
B)natural level of income.
C)equilibrium level of income.
D)autonomous level of income.

Question

Quizplus · Accepted Answer

The point where the aggregate demand function intersects the 45-degree line represents the equilibrium level of income, where aggregate demand is equal to aggregate supply. At this point, there are no unplanned inventory accumulations or reductions, and the economy is in a stable state. Therefore, choice C, equilibrium level of income, is the correct answer.

In the Keynesian Cross Diagram,the Point at Which the Aggregate