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Suppose planned aggregate spending is given by PAE = 5,500 + 0.6Y- 20,000r, and the interest rate ris currently 5 percent (0.05). If potential output equals 11,750, the central bank must the interest rate to close the gap. reduce; expansionary reduce; recessionary raise; recessionary raise; expansionary

Suppose planned aggregate spending is given by PAE = 5,500 + 0.6Y- 20,000r, and the interest rate ris currently 5 percent (0.05). If potential output equals 11,750, the central bank must the interest rate to close the gap. reduce; expansionary reduce; recessionary raise; recessionary raise; expansionary

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand
Section: Chapter Questions
Problem 4CQQ
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Suppose planned aggregate spending is given by PAE = 5,500 + 0.6Y- 20,000r, and the interest rate ris currently 5 percent (0.05). If potential output equals 11,750, the central bank must the interest rate to close the gap. reduce; expansionary reduce; recessionary raise; recessionary raise; expansionary
Transcribed Image Text:Suppose planned aggregate spending is given by PAE = 5,500 + 0.6Y- 20,000r, and the interest rate ris currently 5 percent (0.05). If potential output equals 11,750, the central bank must the interest rate to close the gap. reduce; expansionary reduce; recessionary raise; recessionary raise; expansionary
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