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If Planned Aggregate Expenditure (PAE)in an Economy Equals 1,000

Question 39

Multiple Choice

If planned aggregate expenditure (PAE) in an economy equals 1,000 + 0.6Y and potential output (Y*) equals 3,000,then this economy has


A) an expansionary gap.
B) a recessionary gap.
C) no output gap.
D) an income-expenditure multiplier equal to 5.
E) an income-expenditure multiplier equal to 9.

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