If Planned Aggregate Spending in an Economy Can Be Written

question 21

Multiple Choice

If planned aggregate spending in an economy can be written as PAE = 15,000 + 0.6Y − 20,000r, and potential output equals 34,000, what real interest rate must the Federal Reserve set to bring the economy to full employment?

• A)7 percent
• B)3 percent
• C)6 percent
• D)5 percent

---

Definitions:

Free Market

An economic system where prices for goods and services are determined by open competition among businesses, without government intervention.

Radio Pirates

Individuals or organizations that operate a radio station without a legal license, often broadcasting content not covered by mainstream outlets.

Federal Licenses

Official permissions granted by the federal government to individuals or organizations, permitting them to carry out specific activities.

Free Market

An economic system where prices for goods and services are determined by the open market and consumers, in contrast to a controlled or regulated market system.