If Planned Aggregate Expenditure (PAE )In an Economy Equals 3,000

question 88

Multiple Choice

If planned aggregate expenditure (PAE ) in an economy equals 3,000 + 0.75Y and potential output (Y*) equals 12,000, 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:

Productivity

The measure of how efficiently production inputs, such as labor and materials, are converted into outputs, or goods and services.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a given period of time.

Shifts

Designated working periods for employees, defined by specific start and end times, to ensure continuous operation or coverage.

Productivity Increase

An improvement in the efficiency of producing goods or services, measured by the output per unit of input.