On the 45 Degree-Line Diagram,for Points That Lie Below the 45

question 22

Multiple Choice

On the 45 degree-line diagram,for points that lie below the 45 degree line

• A)planned aggregate expenditure is greater than GDP.
• B)planned aggregate expenditure is less than GDP.
• C)planned aggregate expenditure is equal to GDP.
• D)planned aggregate expenditure is less than aggregate income.

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Definitions:

Opportunity Cost

represents the value of the best alternative foregone as a result of making a particular choice.

Accounting Costs

Represent the explicit costs or direct financial expenditures associated with the operations of a business.

Monetary Costs

The financial expenses incurred in the acquisition of goods, services, or assets, measured in units of currency.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.