Suppose that the aggregate expenditure curve can be expressed algebraically as AE = 3,000 2,000r, Where
Question:
AE = 3,000 – 2,000r,
Where AE is aggregate expenditures and r is the real interest rate expressed as a decimal. You check the website of the Congressional Budget Office and learn that the level of potential output is 2,900. What is the long-run real interest rate?
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The aggregate expenditure curve shows the real interest rate at each level o...View the full answer
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Related Book For 
Money Banking and Financial Markets
ISBN: 978-0078021749
4th edition
Authors: Stephen Cecchetti, Kermit Schoenholtz
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