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Discuss the significance of 45 degree …

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Discuss the significance of 45 degree line in keynesian
  • 1 answers

Soni Shukla 7 years, 3 months ago

Level of Income (Y) Consumption
expenditure ( C )
Saying (Y-C) Y = AS = C+S
0 200 -200 0
100 250 -150 100
200 300 -100 200
300 350 -50 300
400 400 0 400
500 450 50 500
600 500 100 600
700 550 150 700
At all points on 45 degree line, Consumption is equal to Income. It helps under the Keynesian
Economic analysis.Since the two variables (consumption/Aggregate Expenditure and Income)
are measured in the same units, the 45-degree line has a slope of one and it bisects the 90-
degree angle formed by the two axes.
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