If the Equation for Planned Aggregate Expenditure Is Given by PAE

question 19

Multiple Choice

If the equation for planned aggregate expenditure is given by PAE = 4,000 + 0.6Y and potential output is equal to 10,500,then there is a(n) ________ gap equal to ________ units,so if net exports ________ by ________,the economy will return to potential output.

• A) expansionary;500;decrease;200
• B) expansionary;50;decrease;20
• C) expansionary;6,500;increase;2,600
• D) recessionary;500;increase;200
• E) recessionary;50;increase;20

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