If Planned Aggregate Expenditure (PAE )In an Economy Equals 2,000

question 40

Multiple Choice

If planned aggregate expenditure (PAE ) in an economy equals 2,000 + 0.8Y and potential output (Y*) equals 11,000, then this economy has:

• A)an expansionary gap.
• B)a recessionary gap.
• C)no output gap.
• D)no autonomous expenditure.

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Definitions:

Estimated Regression

A statistical process for estimating the relationships among variables, predicting one variable based on the value of others.

SSE

Sum of Squared Errors, a measure of the difference between the observed and predicted values in statistical models.

Male

Refers to the biological sex that is typically characterized by the XY chromosome pair and is associated with the production of sperm.

Estimated Regression

The process of using statistical methods to predict the value of a dependent variable based on the values of one or more independent variables.