Along the 45° line in the income–expenditure diagram,

consumption is zeroCorrect answerYour answersaving is always positiveCorrect answerYour answerthe vertical value equals the horizontal valueCorrect answerYour answerinvestment equals zeroCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Every point on the 45° line has spending = income, so it marks all possible equilibria.

Concept: The 45° line
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsEquilibrium: AD equals output

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Ten questions from Income Determination & the Multiplier, at your own pace.

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Ten questions from Income Determination & the Multiplier, at your own pace.

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Along the 45° line in the income–expenditure diagram,

Explanation