Multiple Choice
If planned aggregate expenditure (PAE) in an economy equals 1,000 + 0.5Y and potential output (Y*) equals 2,200,government purchases must ________ to eliminate any output gap.
A) increase by 10
B) increase by 100
C) increase by 1,000
D) decrease by 1,000
E) decrease by 100
Correct Answer:
Verified
Correct Answer:
Verified
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