If Aggregate Spending in an Economy Can Be Written as Y

question 137

Multiple Choice

If aggregate spending in an economy can be written as Y = 15,000 + 0.6Y - 20,000r, and potential output equals 36,000, 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:

Fossil Evidence

Refers to physical remnants or imprints of organisms from past geological ages, preserved in rocks and sediments, which provide insights into historical biological life and evolutionary processes.

Bipedalism

A special form of locomotion on two feet found in humans and their ancestors.

Locomotion

The capacity or act of moving from one place to another, utilizing various bodily movements across different species.