Question

Macro equilibrium in the income-expenditure model occurs where aggregate expenditure is equal to national income; this occurs where the aggregate expenditure schedule crosses the ________.

Answer 1

Answer:

45 degree line

Explanation:

In the equilibrium in income and expenditure model, expenditure equals national income when the expenditure crosses the 45 degree line. This means that in income and expenditure being at equilibrium, it means that there is no shift, change, deviation from the outcome.

Expenditure below and above 45 degree is not in equilibrium as that means that government income is either less than or greater than the expenditure respectively.

Cheers