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

question 57

Multiple Choice

If planned aggregate expenditure (PAE) in an economy equals 2,000 + 0.4Y and potential output (Y*) equals 3,500,then this economy has

• A) an expansionary gap.
• B) a recessionary gap.
• C) no output gap.
• D) an income-expenditure multiplier equal to 8.
• E) an income-expenditure multiplier equal to 9.

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Definitions:

Market Anomalies

Instances where financial markets deviate from the expected or normal behavior, often leading to unexpected investment opportunities.

Advertising

The activity or profession of producing advertisements for commercial products or services, aiming to influence the buying behavior of consumers.

Inform Customers

The act of providing customers with necessary or relevant information about products, services, or changes in a timely and clear manner.

Planned Purchases

Buying decisions made after careful consideration and planning, often involving budgeting and research.