26. Suppose the economy is experiencing stagflation. An observer of current events in the economy would expect to see:

greater use of dollars that are backed by gold

an increase in aggregate demand to reduce inflation

a reduction in unemployment in the labor market

a decline in real GDP

27. Suppose the aggregate expenditure function can be expressed as AE=20000 + .9Y. If national income increases by 800, by how much will aggregate expenditures change?

720

2000

80

800

NO EXPLAINATION REQUIRED