In a graph relating private spending (C + Ig) to real gross domestic product (GDP), what does the 45-degree line represent?
What will be an ideal response?
The 45-degree line traces out the points where the economy is in equilibrium. That is, it shows where real GDP is equal to private spending.
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Suppose that in Mysore, the reserve—deposit ratio is
res = 0.5 - 2 i, where i is the nominal interest rate. The currency—deposit ratio is 0.2 and the monetary base equals 100. The real quantity of money demanded is given by the money demand function L(Y, i) = 0.5Y - 10i, where Y is real output. Currently, the real interest rate is 5% and the economy expects an inflation rate of 5%. The money multiplier equals A) 2.00. B) 2.40. C) 3.00. D) 4.00.
The forecasting technique which involves the use of the least squares statistical method to examine trends, and takes into account seasonal and cyclical fluctuations, is known as
A) compound growth rate projection. B) the Delphi method. C) time series projection. D) exponential smoothing projection.