Discuss the significance of 45 degree …
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Yogita Ingle 6 years, 7 months ago
The 45-degree line intersects both the y-axis and x-axis at the origin, as well as forming an angle of 45 degrees with both axes. The Keynesian model describes the relationship between aggregate expenditures and aggregate production. Production is graphed on the x-axis while expenditures is graphed on the y-axis. Due to the 45-degree line relationship, a one billion expenditure in inputs produces one billion in production value. This relationship is actually represented in a much larger representation of the Keynesian model, which includes three additional graphs depicting the foreign sector, aggregate expenditures and the equilibrium level of production.
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