In an Economy in Which Planned Aggregate Expenditure Is Given

question 45

Multiple Choice

In an economy in which planned aggregate expenditure is given by PAE = 3,000 + 0.75Y - 10,000r,the central bank is currently setting the interest rate at 0.06 (6%) .If potential output equals 8,400,the central bank must _______ the interest rate to _______ to restore full employment.

• A) lower;3%
• B) lower;4%
• C) lower;5%
• D) raise;8%
• E) raise;9%

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Definitions:

Negative Mood

A psychological state characterized by feelings of sadness, dissatisfaction, or general malaise.

Presenteeism

The act of attending work while not fully functional due to illness, injury, or other conditions, leading to reduced productivity.

Autonomy

The degree of independence and self-direction that an individual or entity possesses.

Stress

A physical, mental, or emotional strain or tension resulting from adverse or demanding circumstances.