If Planned Aggregate Expenditure (PAE)in an Economy Equals 4,000

question 95

Multiple Choice

If planned aggregate expenditure (PAE) in an economy equals 4,000 + 0.6Y and potential output (Y*) equals 9,800,transfer payments must be decreased by ________ (rounded to the nearest whole number) to eliminate any output gap.

• A) 10
• B) 100
• C) 1,111
• D) 33
• E) 133

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Definitions:

Option to Expand

A strategic investment option that gives a business the flexibility to increase its operations or output at a later date.

Golf Course

A large area of land designed for the game of golf, featuring a series of holes with various configurations and hazards.

Property Developer

An individual or company that engages in the business of real estate development, including acquiring land, financing real estate deals, building or having builders construct projects.

U-joint Cross

The central component of a universal joint, which allows for the transfer of rotary motion between misaligned shafts.