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24 February, 2016 - 16:12

Real aggregate output (or net national product NNP) is the 45 degree line in the Keynesian model because total income is equal to total output since taxes and transfer payments are omitted, and total output can be shown vertically as the 45 degree line.

Figure 8.1 Aggregate Output

Aggregate output is very closely correlated to national income; in fact, if there were no government, it would be almost identical.