What does the 45-degree line in the Aggregate Expenditures model represent? all saving and no consumption...

What does the 45-degree line in the Aggregate Expenditures model represent? all saving and no consumption maximum consumption and maximum saving no consumption and no saving a reference line where income equals spending

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Ans.- a reference line where income equals spending

45 degree line is a reference line where income equals saving. It's the same line Y=X as we draw in the X-Y plane , just we put X= income and Y = spending. This line is used to find the equilibrium level of income or spending.

Rahul Sunny answered 2 years ago

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