if planned aggregate spending in an economy can be written as PAE = 28 000 + 0.4Y – 40 000r, and potential output equals 44 000, what real interest rate must the Reserve Bank set to bring the economy to full employment? Group of answer choices 0.02 0.03 0.06 0.04
Added by David H.
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4Y – 40,000r, where PAE is planned aggregate spending, Y is output, and r is the real interest rate. The goal is to find the real interest rate (r) that will bring the economy to full employment, which is when output (Y) equals potential output (44,000). Show more…
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