If Planned Aggregate Expenditure (PAE)in an Economy Equals 1,000

question 124

Multiple Choice

If planned aggregate expenditure (PAE) in an economy equals 1,000 + 0.9Y and potential output (Y*) equals 9,000, then this economy has:

• A)an expansionary gap.
• B)a recessionary gap.
• C)no output gap.
• D)no autonomous expenditure.

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Definitions:

Operating Activities

Transactions related to the core business functions of a company, such as sales and purchase of goods and services.

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits distributed in cash.

Statement Of Cash Flows

A financial document summarizing total cash inflows from operational activities and external investments alongside outflows for business operations and investment expenditures over a specific timeframe.

Investing Activities

Finance-related activities in a company that involve acquiring or disposing of long-term assets.