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If Planned Aggregate Expenditure Equals 5,000 + 0

Question 5

Multiple Choice

If planned aggregate expenditure equals 5,000 + 0.55Y and potential output (Y*) equals 10,000,then this economy has a(n) __________ gap that can be closed by _________.


A) expansionary;increasing taxes
B) expansionary;increasing transfer payments
C) expansionary;increasing government purchases
D) recessionary;increasing government purchases
E) recessionary;increasing taxes

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