14. Refer to the accompanying figure. PAE = 1,000 + 0.75Y 4,750 4,000 3,250 1,000 45° 3,000 4,000 5,000 Output, Y Based on the Keynesian cross diagram, at short-run equilibrium output, A. there is a recessionary gap. B. there is an expansionary gap. C. output equals potential output. D. firms will be producing more than they can sell. Planned Aggregate Expenditure, PAE

14. Refer to the accompanying figure. PAE = 1,000 + 0.75Y 4,750 4,000 3,250 1,000 45° 3,000 4,000 5,000 Output, Y Based on the Keynesian cross diagram, at short-run equilibrium output, A. there is a recessionary gap. B. there is an expansionary gap. C. output equals potential output. D. firms will be producing more than they can sell. Planned Aggregate Expenditure, PAE

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 7QP

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Question

14. Refer to the accompanying figure.
PAE = 1,000 + 0.75 Y
4,750
4,000
3,250
1,000
45°
3,000 4,000 5,000
Output, Y
Based on the Keynesian cross diagram, at short-run equilibrium output,
A. there is a recessionary gap.
B. there is an expansionary gap.
C. output equals potential output.
D. firms will be producing more than they can sell.
Planned Aggregate Expenditure, PAE

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