# why the 45 degree line of aggregat supply

• #### The '45 Degree' Diagram | S-cool, the revision

There is a line that comes diagonally out of the origin at an angle of 45 degrees. The reason why these diagrams have this 45-degree line is that for every point on the line, the value of whatever is being measured on the x-axis is equal to the value of whatever is being measured on the y-axis. In this case, that means that Y = C.

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• #### Recessionary and Inflationary Gaps in the Income

The appropriate Keynesian response to an inflationary gap is shown in Figure 1(b). The original intersection of aggregate expenditure line AE 0 and the 45-degree line occurs at \$8,000, which is above the level of potential GDP at \$7,000. If AE 0 shifts down to AE 1, so that the new equilibrium is at E 1, then the economy will be at potential GDP without pressures for inflationary price increases.

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• #### Aggregate Expenditure and the 45 degree line -

10.10.2011· This movie goes over aggregate expenditure and its relationship with real GDP and the 45 degree line graph. It is important to understand the differences tha

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• #### what is significane of 45 degree line in

Dear student,The Aggregate Supply curve is represented by the 45° line. Throughout this line the planned expenditure is equal to the planned output. That is AS = Y = Expenditure. The implication of 45° line is that in case of any disequilibrium, AS will be adjusted in a way to equate AD in order to restore equilibrium back. That is in other words, in case of any inequality between AD and AS

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• #### Solved: The 45 Degree-line Represents Which Of

Question: The 45 Degree-line Represents Which Of The Following? The Aggregate Demand Curve In The Short Run. The Aggregate Supply Curve In The Long Run. The Full-employment Supply Curve. The Aggregate Demand Curve In The Long Run. The Aggregate Supply Curve In The Short Run. The Level Of National Income (GDP) May Decrease If The Level Of

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• #### Solved: The 45 degree line drawn to find the

The 45 degree line drawn to find the demand-side equilibrium: a) Shows all points at which the aggregate demand is equal to aggregate supply, b) Shows all points at which the general price level

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• #### Solved: The 45 Degree-line Represents Which Of

Question: The 45 Degree-line Represents Which Of The Following? The Aggregates Demand Curve In The Short Run. The Aggregate Supply Curve In The Long Run. The Full-employment Supply Curve. The Aggregate Demand Curve In The Long Run. The Aggregate Supply Curve In The Short Run. The Level Of National Income (GDP) May Decrease If The Level Of Imports Increase. The This problem

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• #### Solved: Why is a 45-degree curve in

In general, the 45-degree line is not the aggregate supply curve. But it could be viewed as the aggregate supply curve in the Keynesian cross model, See full answer below.

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• #### Solved: The 45 Degree-line Represents Which Of

Question: The 45 Degree-line Represents Which Of The Following? The Aggregates Demand Curve In The Short Run. The Aggregate Supply Curve In The Long Run. The Full-employment Supply Curve. The Aggregate Demand Curve In The Long Run. The Aggregate Supply Curve In The Short Run. The Level Of National Income (GDP) May Decrease If The Level Of Imports Increase. The This problem

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• #### Equilibrium in the Income-Expenditure Model |

To understand why the point of intersection between the aggregate expenditure function and the 45-degree line is a macroeconomic equilibrium, consider what would happen if an economy found itself to the right of the equilibrium point E, say point H in Figure 2, where output is higher than the equilibrium. At point H, the level of aggregate expenditure is below the 45-degree line, so that the

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• #### Why is Aggregate Supply Curve, a 45 degree line

The Aggregate Supply curve is represented by the 45° line. Throughout this line the planned expenditure is equal to the planned output. That is AS = Y = Expenditure. The implication of 45° line is that in case of any disequilibrium, AS will be adjusted in a way to equate AD in order to restore equilibrium back.

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• #### AmosWEB is Economics: Encyclonomic WEB*pedia

In particular, the intersection between the 45-degree line and the aggregate expenditures line indicates the equilibrium level of aggregate production. Consumption Line: The 45-degree line is also used as a guide for working with the consumption line. Because the 45-degree line has a slope of one, it serves to highlight that the slope of the consumption line is less that one. Moreover, because

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• #### MacroEconomics Chapters Flashcards | Quizlet

If the consumption function lies above the 45-degree line then saving is positive. Exhibit 8-6 Aggregate expenditures function As shown in Exhibit 8-6, the marginal propensity to consume (MPC) is: 0.50. Classical economic theory predicted that in the long run the economy would experience: full employment. As shown in Exhibit 8-2, the 45 degree line represents: all points where real consumption

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• #### Assume that the country of Clockula has an

that is a 45 degree line where all points along the line are positive numbers. Also assume an aggregate demand curve that is perpendicular to the aggregate supply curve and all points along the line are positive numbers. Using this information, select all responses that apply to the following statement. A tax cut would be most beneficial to the economy of Clockula

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• #### All of the points above the 45 degree line in the

All of the points above the 45-degree line in the aggregate expenditure model represent a condition where A. production exceeds expenditure. B. macroeconomic equilibrium is maintained. C. planned investment is greater than actual investment. D. inventories are rising. 4. A stock market crash which causes stock prices to fall should cause

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• #### Appendix D: The Expenditure-Output Model –

To understand why the point of intersection between the aggregate expenditure function and the 45-degree line is a macroeconomic equilibrium, consider what would happen if an economy found itself to the right of the equilibrium point E, say point H in Figure 8, where output is higher than the equilibrium. At point H, the level of aggregate expenditure is below the 45-degree line, so that the

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• #### Why is Aggregate Supply Curve, a 45 degree line

The Aggregate Supply curve is represented by the 45° line. Throughout this line the planned expenditure is equal to the planned output. That is AS = Y = Expenditure. The implication of 45° line is that in case of any disequilibrium, AS will be adjusted in a way to equate AD in order to restore equilibrium back.

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• #### The 45-Degree Line of Economics Definition |

The 45-degree line of economics is so named because it forms a 45-degree angle with both the x and y axes when charted. In Keynesian economics, this line illustrates all of the points at which aggregate expenditures, measured on the y, or vertical axis, are equal to aggregate production, which are measured on the x, or horizontal axis.

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• #### what is significane of 45 degree line in

Dear student,The Aggregate Supply curve is represented by the 45° line. Throughout this line the planned expenditure is equal to the planned output. That is AS = Y = Expenditure. The implication of 45° line is that in case of any disequilibrium, AS will be adjusted in a way to equate AD in order to restore equilibrium back. That is in other words, in case of any inequality between AD and AS

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• #### Aggregate supply - Wikipedia

Aggregate supply is targeted by government "supply-side policies" which are meant to increase productive efficiency and hence national output. Some examples of supply-side policies include education and training, research and development, supporting small/medium entrepreneurs, decreasing business taxes, making labour market reforms to diminish frictions that may hold down output, and

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