In a Certain Economy,the Components of Planned Aggregate Expenditure Are

question 121

Multiple Choice

In a certain economy,the components of planned aggregate expenditure are given by:
C = 60 + 0.6 (Y - T) - 1,000r
I = 200 - 1,000r
G = 200
NX = 50
If potential output equals 925,net taxes equal 100 and the central bank sets the interest rate equal to 0.05 (5%) ,then at the short-run equilibrium,there is a(n) ________ gap of ________.

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

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Definitions:

Conservative Agenda

Refers to political goals that emphasize traditional values, limited government, and free market principles.

Welfare State

A term that originated in Britain during World War II to refer to a system of income assistance, health coverage, and social services for all citizens.

Vietnamization

A policy of the Richard Nixon administration during the Vietnam War to end U.S. involvement in the war by expanding, equipping, and training South Vietnamese forces to take over combat roles.

South Vietnamese Troops

Armed forces of the Republic of Vietnam (South Vietnam), which fought against the North Vietnamese Army and Viet Cong during the Vietnam War.