Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

What does the 45 degree line in Keynesian economics imply?

Options:

Nothing specific in signified, the purpose is better representation of S and Y

Each point on the line indicates that S > C

Each point on the line indicates that S < C

Each point on the line is equidistant from both the axes 

Correct Answer:

Each point on the line is equidistant from both the axes 

Explanation:

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.