If Planned Aggregate Spending in an Economy Can Be Written

question 42

Multiple Choice

If planned aggregate spending in an economy can be written as PAE = 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) 0.02
• B) 0.03
• C) 0.04
• D) 0.05

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Definitions:

Artificial Veins

Synthetically made veins used to replace or bypass damaged or diseased veins, commonly applied in medical procedures to restore normal blood flow.

Dialysis

Removal of the products of urine from the blood by passage of the solutes through a membrane.

Cystitis

An inflammation of the bladder, often caused by a bacterial infection, leading to symptoms such as frequent urination and pain.