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What does it mean when the aggregate expenditure line crosses the 45-degree line? In other words, how would you explain the intersection in words?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 12QP

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What does it mean when the aggregate expenditure line crosses the 45-degree line? In other words, how would you explain the intersection in words?

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Learning Tasks: 1. Explain the components of the equation C = 50 + 0.65 Yd Assessment: 1. What does the 45-degree line show? 2. What does it mean when the aggregate expenditure line crosses the 45-degree line? In other words, how would you explain the intersection in words?
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In a simple economy (assume there are no taxes, thus Y is disposable income), the consumption function is C= 100 +0.75Y Investment is equal to 400. In this economy, equilibrium GDP is $ (Round your answer to the nearest dollar) 1.) Using the point drawing tool, on the graph to the right, indicate the real GDP point that you found above Label the point 'E' 2) Using the line drawing tool, carefully graph the consumption plus investment line Properly label your line Carefully follow the instructions above, and only draw the required objects