The Macroeconomic Variable Used to Assess the Equivalence of PAE

question 92

Multiple Choice

The macroeconomic variable used to assess the equivalence of PAE and actual output (Y) is:

• A) unemployment.
• B) interest rates.
• C) inventories.
• D) capital expenditure.

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Definitions:

Price Weighted Index

A stock market index in which each company's stock influences the index in proportion to its price per share.

Adjustable Rate Mortgage

A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan according to market conditions.

Fixed Rate Mortgage

A mortgage in which the interest rate remains constant throughout the term of the loan.

Interest Rate

is the cost of borrowing money or the return on investment in a savings account, usually expressed as a percentage of the principal over a period of one year.