If planned aggregate expenditure (PAE) in an
economy equals 1,800 + 0.8Y and potential output equals 10,000, then:

Question

Answer

None of the other answers is correct

Answer

200 increase in autonomous consumption would close the output gap.

Answer

1,000 increase in autonomous consumption   would close the output gap.

Answer

200 reduction in autonomous consumption   would close the output gap.

Answer

1,000 reduction in autonomous consumption would close the output gap.

Answer

Equilibrium output is 10,000, so no policy adjustment is needed.

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