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If Planned Aggregate Expenditure (PAE)in an Economy Equals 2,000

Question 26

Multiple Choice

If planned aggregate expenditure (PAE) in an economy equals 2,000 + 0.6Y and potential output (Y*) equals 4,900,transfer payments must be decreased by ________ (rounded to the nearest whole number) to eliminate any output gap.


A) 67
B) 200
C) 225
D) 250
E) 1,000

Correct Answer:

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