If the Equation for Planned Aggregate Expenditure Is Given by PAE

question 46

Multiple Choice

If the equation for planned aggregate expenditure is given by PAE = 5,000 + 0.9Y and potential output is equal to 55,000,then there is a(n) ________ gap equal to ________ units,so if net exports ________ by ________,the economy will return to potential output.

• A) expansionary;5,000;decrease;500
• B) expansionary;500;decrease;50
• C) expansionary;10,000;increase;1,000
• D) recessionary;5,000;increase;500
• E) recessionary;500;increase;50

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