What does the 45 degree line in Keynesian economics imply?
Answer & explanation
Correct answer: option 4
The correct answer is option 4: Each point on the line is equidistant from both the axes
The 45 degree line is the aggregate supply curve which is obtained by adding the consumption and savings level. It will form a straight line which makes an angle of 45 degree, implying that each point is equidistant from both the axes.