In an Economy Where Aggregate Spending Is Given by Y

question 13

Multiple Choice

In an economy where aggregate spending is given by Y = 5,500 + 0.6Y - 20,000r, the interest rate is currently 2 percent (0.02) . If potential output equals 8,000, the central bank must ______ the interest rate to close the ______ gap.

• A) lower; expansionary
• B) lower; recessionary
• C) raise; recessionary
• D) raise; expansionary

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Definitions:

Obsessions

Persistent and intrusive thoughts, impulses, or images that cause significant anxiety or distress.

Consciousness

The state of being awake and aware of one's surroundings and thoughts.

Persistent Thoughts

Repeated, ongoing thoughts that may be intrusive and unwelcome, often associated with anxiety or obsessive-compulsive disorders.

Antidepressants

Medications primarily used to treat depression by altering brain chemistry to improve mood and stress-coping mechanisms.