Which of the Following Statements About the 45 Degree Line

question 10

Multiple Choice

Which of the following statements about the 45 degree line is true?

• A) The 45 degree line cuts the vertical axis at the level of autonomous expenditure in the economy.
• B) The 45 degree line connects all points where interest rates and national income are equal.
• C) The slope of the 45 degree line is determined by the marginal propensity to consume.
• D) A steeper 45 degree line indicates an inflationary gap.
• E) The 45 degree line connects all points where consumption spending would equal national income.

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Chicago

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