The Figure Given Below Depicts Macroeconomic Equilibrium in a Closed

question 34

Multiple Choice

The figure given below depicts macroeconomic equilibrium in a closed economy.Assume that the spending multiplier in this economy is 1.5. Figure 10.5 Refer to Figure 10.5.Suppose that instead of there being a recessionary gap, the economy is characterized by an equilibrium real GDP level of $900 that exceeds the natural unemployment or potential real GDP level by $600.This so-called expansionary gap can be closed by:

• A)increasing planned aggregate expenditures by $400.
• B)lowering government purchases by $600.
• C)lowering autonomous consumption spending by $400.
• D)increasing planned aggregate expenditures by $900.
• E)lowering autonomous net exports by $600.

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Definitions:

Medial and Lateral

Terms used to describe the relative positions of structures within the body, with medial meaning towards the midline and lateral meaning away from the midline.

Anterior and Posterior

Terms used to describe the location of structures within the body, with anterior meaning towards the front and posterior meaning towards the back.

Superior and Inferior

Terms used in anatomy to describe a structure's location; "superior" means above or higher, and "inferior" means below or lower.

Proximal and Distal

Terms used to describe locations on the body with respect to another: proximal means closer to the trunk, and distal means farther from the trunk.