If Planned Aggregate Expenditure Equals 5,000 + 0

question 128

Multiple Choice

If planned aggregate expenditure equals 5,000 + 0.55Y and potential output (Y*) equals 10,000,then this economy has a(n) __________ gap that can be closed by _________.

• A) expansionary;decreasing taxes
• B) expansionary;increasing transfer payments
• C) expansionary;decreasing government purchases
• D) recessionary;increasing government purchases
• E) recessionary;increasing taxes

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Definitions:

Subcutaneous Tissue

The layer of tissue directly under the skin, consisting of connective tissue and fat, which provides insulation and cushioning for the body.

Wound Healing

The biological process by which the skin and tissues repair themselves after injury, involving several stages including hemostasis, inflammation, proliferation, and remodeling.

Diabetic Mellitus

A metabolic disease characterized by high blood sugar levels over a prolonged period, resulting from defects in insulin secretion, insulin action, or both.

Circulatory Insufficiency

A condition where the blood supply is inadequate, leading to insufficient oxygen and nutrient delivery to tissues.