Principles of Macroeconomics / Unit 9 MAC 0816 short lesson, about 20 seconds
The 45-Degree Line
Captions available
The idea
A 45-degree line from the origin marks every point where planned spending equals output. Equilibrium lies on it, because GDP is the value of what is spent.
In practice
At any point on the line, the vertical and horizontal readings are the same number.
Where people slip
The line is not a behavioural relationship but a definition drawn as a graph.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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