If Planned Aggregate Expenditure Equals 5,000 + 0

question 61

Multiple Choice

If planned aggregate expenditure equals 5,000 + 0.55Y and potential output (Y*) equals 12,000,then this economy has a(n) __________ gap that can be closed by _________.

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

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Definitions:

Binomial Distribution

a probability distribution describing the number of successes in a fixed number of independent Bernoulli trials, with a constant probability of success.

Bernoulli Experiment

A random experiment with exactly two possible outcomes, often termed success and failure.

Probability Density Function

A Probability Density Function (PDF) is a function that describes the relative likelihood for a continuous random variable to take on a given value.

Expected Value

A statistical measure that calculates the average outcome of a random variable after many repetitions of an experiment.