In an Economy in Which Planned Aggregate Expenditure Is Given

question 46

Multiple Choice

In an economy in which planned aggregate expenditure is given by PAE = 5,500 + 0.6Y - 20,000r,the central bank is currently setting the interest rate at 0.06 (6%) .If potential output equals 11,250,the central bank must _______ the interest rate to _______ to restore full employment.

• A) lower;3%
• B) lower;4%
• C) lower;5%
• D) raise;7%
• E) raise;8%

---

Definitions:

Overtime Rules

Regulations that govern how employees are to be compensated for work performed beyond their standard working hours.

Exempt Employees

Workers who are excluded from the minimum wage and overtime pay requirements of the Fair Labor Standards Act, typically due to their job duties and salary level.

Consolidated Omnibus Budget Reconciliation Act

A U.S. federal law that provides for the continuation of group health coverage that otherwise might be terminated.

Medical Benefits

Health-related services and support covered by health insurance plans or provided through government programs.