If Planned Aggregate Spending in an Economy Can Be Written

question 139

Multiple Choice

If planned aggregate spending in an economy can be written as PAE = 15,000 + 0.6Y − 20,000r, and potential output equals 35,000, what real interest rate must the Federal Reserve set to bring the economy to full employment?

• A)2 percent
• B)3 percent
• C)4 percent
• D)5 percent

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Definitions:

Validity

An index of the extent to which a measure truly reflects what it is supposed to measure.

Employment Interview

A formal conversation between a job applicant and a representative of an employer which is conducted to assess whether the applicant should be hired.

Selection

The process of choosing from among alternatives based on certain criteria, often used in contexts like recruitment or information processing.

Similar-To-Me Effect

The tendency of individuals to favor or rate more positively those who are perceived to be similar to themselves in some manner.