Along the 45-Degree Reference Line

question 296

Multiple Choice

Along the 45-degree reference line

• A) total planned real expenditures = real GDP.
• B) total planned real expenditures = planned nominal expenditures.
• C) total planned nominal expenditures = consumption.
• D) total planned investment spending = planned real expenditures.

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Definitions:

Depression

A severe and prolonged downturn in economic activity, marked by significant declines in income, employment, and production, often more severe than a recession.

Gross Investment

The total amount spent on purchasing or constructing new capital goods over a specific time period, without accounting for depreciation.

Net Investment

Net investment refers to the total amount spent on purchasing new capital minus the depreciation on existing capital, indicating the growth of a company or economy's productive capacity.

Capital Goods

Long-lasting goods acquired and used by businesses to produce other goods and services, contributing to their operational capabilities.