The figure shows planned aggregate expenditure and output for an economy.Planned Aggregate Expenditure (PAE)Y₁Y2.FEY3Actual Aggregate Expenditure (Output or GDP, Y)The distance betweenPAEYPAE3PAE2PAE₁Killustrates an inflationary expenditure gap. The distance betweenMultiple ChoiceOOOPAE₁ and PAE2PAE2 and PAE3Y2 and Y3Y₁ and Y2illustrates an inflationary expenditure gap.

Actual output is produced at PAE = Y. Full employment output is denoted by YFE.The inflationary gap…

Answered: The distance between illustrates an…

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The distance between illustrates an inflationary expenditure gap.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The figure shows planned aggregate expenditure and output for an economy.
Planned Aggregate Expenditure (PAE)
Y₁
Y2.FE
Y3
Actual Aggregate Expenditure (Output or GDP, Y)
The distance between
PAEY
PAE3
PAE2
PAE₁
K
illustrates an inflationary expenditure gap.

The distance between
Multiple Choice
O
O
O
PAE₁ and PAE2
PAE2 and PAE3
Y2 and Y3
Y₁ and Y2
illustrates an inflationary expenditure gap.

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