In an Economy in Which Planned Aggregate Expenditure Is Given

question 8

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 0.05 (5%) .If potential output equals 10,800,the central bank must __________ the interest rate to ________ to restore full employment.

• A) lower;3%
• B) lower;4%
• C) raise;6%
• D) raise;7%
• E) raise;8%

---

Definitions:

Openness to Experience

A personality trait characterized by a willingness to try new things and be open to new experiences and ideas.

Personality Factor

An aspect of personality that can be measured and represents significant variation among individuals.

Narrow-Minded

Having a limited or inflexible perspective, often unwilling to consider alternative ideas or viewpoints.

Patterns of Behavior

Repeated actions or reactions that occur in a predictable manner, often based on habits, culture, or psychological conditioning.