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AE Model: Graphing Macroeconomic Equilibrium
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Problem 10
AE Model: Graphing Macroeconomic Equilibrium
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16. Deriving the Aggregate Expenditures Model / AE Model: Graphing Macroeconomic Equilibrium / Problem 4
Problem 4
Why is the 45-degree line significant in the aggregate expenditures model?
A
It shows the maximum possible GDP for an economy.
B
It represents points where aggregate expenditures equal GDP, indicating macroeconomic equilibrium.
C
It indicates the level of inflation in the economy.
D
It represents the total savings in the economy.
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