Sketch the 45-Degree Line and the Expenditure Line on a Diagram

question 137

Essay

Sketch the 45-degree line and the expenditure line on a diagram. What determines the slope of each line? Explain why the point of intersection is the only possible equilibrium point. Use this diagram to show what happens to the level of income if government purchases decline.

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Definitions:

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A mistake in reasoning or process in evaluating information, leading to incorrect conclusions or judgments.

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The process by which one becomes an intelligent person.