Answer to Question #133699 in Macroeconomics for Valerie

Question

Which of the following statements is correct?
A. At any point below the 45-degree line, aggregate spending is greater than production and income.
B. At any point below the 45-degree line, aggregate spending is less than production but greater than income.
C. At any point below the 45-degree line, aggregate spending is greater than income but smaller than production.
D. At any point below the 45-degree line, aggregate spending is less than production and income.

Answer 1

At any point below the 45-degree line, aggregate spending is greater than income but smaller than production.