In an Economy Where Aggregate Spending Is Given by Y

question 136

Multiple Choice

In an economy where aggregate spending is given by Y = 3,000 + .75Y - 10,000 r, the central bank is currently setting the interest rate at 0.06 (6 percent) . If potential output equals 9,500, the central bank must ____ the interest rate to close the __________ gap.

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

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Definitions:

Clippers

Hand-held tools used primarily for cutting hair or fur, but they can also refer to large machines used in agriculture or gardening.

Sterile Dressing

A type of medical dressing that is free from bacteria or other living microorganisms, used to protect wounds from infection.

No Gloves

A situation where protective handwear is not used, potentially posing a risk of contamination or harm in medical or industrial settings.

Sterile Field

A specific area kept free of all microorganisms to prevent infection during medical procedures.