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

question 26

Multiple Choice

If planned aggregate expenditure (PAE) in an economy equals 2,000 + 0.6Y and potential output (Y*) equals 4,900,transfer payments must be decreased by ________ (rounded to the nearest whole number) to eliminate any output gap.

• A) 67
• B) 200
• C) 225
• D) 250
• E) 1,000

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Definitions:

Milliamps

A unit of electric current equal to one-thousandth of an ampere, used to measure the intensity of an electrical current.

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