Question:
Under the Keynesian theory, ‘Reference Line’ is a straight line passing through the origin drawn at an angle of _______.
(Choose the correct option to fill in the blank)
Under the Keynesian theory, ‘Reference Line’ is a straight line passing through the origin drawn at an angle of _______.
(Choose the correct option to fill in the blank)
(Choose the correct option to fill in the blank)
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In Keynesian theory, the 45° line is crucial for showing equilibrium where income equals expenditure.
Updated On: Jul 1, 2025
- 25°
- 40°
- 45°
- 70°
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The Correct Option is C
Solution and Explanation
In Keynesian economics, the 'Reference Line' or the 45-degree line represents situations where aggregate expenditure is equal to aggregate output or income. This line is drawn at a 45° angle from the origin on the income-expenditure diagram, indicating points where planned spending equals actual output.
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