Discussions - Discuss the following with reasonable explanations:1. Refer to the accompanying figure.Planned Aggregate Expenditure, PAE4.750 PANDANGAN DAN KESINETE SINT MAARTENKE4.0003250#}#11240108$##***************3.000 4.000 5,000YPAE=1,000+ 0.75YOutput, YIBased on the Keynesian cross diagram, if output equals 5,000, what kind of output gapexists in such a situation and how do firms respond to the gap?

The potential level of output is depicted by Y*. The potential level output is 3000 (See the…

Answered: 1. Refer to the accompanying figure.…

1. Refer to the accompanying figure. Planned Aggregate Expenditure, PAE 4.750 4,000 3,250 1,000 45° 3,000 4.000 5,000 Y" PAE 1,000+0.75Y Output, Y on the Keynesian cross diagram, if output equals 5,

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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