If Planned Aggregate Expenditure (PAE)in an Economy Equals 1,000

question 124

Multiple Choice

If planned aggregate expenditure (PAE) in an economy equals 1,000 + 0.9Y and potential output (Y*) equals 9,000, 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:

Townshend Acts

A series of British Acts of Parliament passed during 1767 and 1768 that placed duties on common products imported to the American colonies, such as paper, tea, glass, and lead, leading to widespread opposition.

Circular Letter

A written communication sent to a closed group of people or organizations, often for the purpose of informing or soliciting support.

House of Burgesses

The first legislative assembly of elected representatives in North America, established by the Virginia Company in 1619, playing a significant role in American colonial government.

Stamp Act Resolves

A series of resolutions passed in 1765 by the American colonies protesting the British Stamp Act, which imposed direct taxation without representation.