Problem
Understanding the 45° Line. Use the simple income-expenditure diagram depicted in Figure 11.3 on page 226 to answer the following questions.
a. If output equals y1 , what is the level of expenditures?
b. At output equal to y1 , does the level of expenditures fall above, below, or on the 45° line?
c. What does this say about the relationship between output and expenditures?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.