The 45-degree line on a graph relating consumption and income shows:

Question

all points where the MPC is constant.

all the points at which consumption and income are equal.

all points at which saving and income are equal.

the amounts households will plan to save at each possible level of income

The introduction of government sector in the Keynesian model assumes that:

there is no relationship between government spending and total income

government spending is autonomous

it has no impact on the size of the multiplier

all the above statements are correct

Answer 1

1. The 45-degree line on a graph relating consumption and income shows:
   all the points at which consumption and income are equal.
   The 45-degree line indicates the points where the level of consumption is equal to the level of income; if you are above the line, you are consuming more than your income (which typically indicates saving), and if you are below, you are consuming less than your income.

2. The introduction of the government sector in the Keynesian model assumes that:
   government spending is autonomous.
   This means that government spending can increase total demand and is not directly tied to the level of income, leading to changes in the overall economic output. The other statements provided are typically not considered correct in the context of Keynesian economics.