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:

Process Costing Systems

Accounting methods used to allocate production costs to products or services in continuous processes, where the products are indistinguishable from each other.

Repetitive Products

Goods that are mass-produced, usually on an assembly line, with little variation in design for each unit produced.

Opening Work In Process

The value of the products that were in the process of being manufactured at the beginning of an accounting period.

Prior Process Costs

Costs that have been incurred in earlier stages of the production process and are carried forward into subsequent stages.