In economics, if a diagram has a line passing through the origin and has 45° angle with either axis and it is asserted that along the line X = Y, what is tacitly assumed?

In economic diagrams, a 45-degree line passing through the origin represents a locus of points where the value on the vertical axis (Y) is exactly equal to the value on the horizontal axis (X). For the assertion X = Y to hold true in a geometric sense, it is tacitly assumed that both variables are measured in the same units. This is most prominent in the Keynesian cross model, where aggregate expenditure and aggregate production (income) are both measured in monetary units (e.g., billions of euros). If the units differed, a 45-degree angle would not necessarily represent numerical equality because the scale of the axes would be incomparable. This line serves as a benchmark for perfect equality, such as in the Lorenz curve analysis where it represents an equal distribution of income.

Sources

1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > Lorenz Curve Explained > p. 45