In Macroland,the Components of Planned Aggregate Expenditure Are Given By

question 12

Multiple Choice

In Macroland,the components of planned aggregate expenditure are given by:
C = 100 + 0.9(Y - T) - 500r
I = 150 - 1,000r
G = 200
NX = 50
If potential output equals 3,500,net taxes equal 100,and the central bank sets the interest rate to equal 0.05 (5%) ,then at the short-run equilibrium,there is a(n) _________ gap of ________.

• A) expansionary;100
• B) expansionary;150
• C) recessionary;50
• D) recessionary;100
• E) recessionary;150

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