1-On the 45-degree line diagram, the 45-degree line shows points where*

Real aggregate expenditure equals C + I

Real aggregate expenditure equals real GDP

Real aggregate output equals the quantity produced

Real income equals real GDP

2-In the Keynesian model, the primary determinant of consumption spending is _______ and the primary determinate of saving is ______*

Disposable income, the interest rate

Saving; investment

Supply; demand

Disposable income, disposable income

3-At equilibrium expenditure, unplanned changes in inventory*

Must be positive

Must be zero

Must be negative

Might be either positive or negative

4-Firms react to unplanned increases in inventories by*

Reducing output

Increasing output

Increasing planned investment

Increasing consumption

5-All of the following raise consumption except*

Decreasing MPC

Raising autonomous consumption

Raising disposable income

Raising MPC