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17. Consider the Keynesian model discussed in class. If Y>PAE, then the economy: a. Is in equilibrium and experiencing a cont
20. Which of the following best describes the different characteristics of long run equilibrium in the aggregate demand/aggre
17. Consider the Keynesian model discussed in class. If Y>PAE, then the economy: a. Is in equilibrium and experiencing a contractionary gap b. Is in equilibrium and inventories are lower than planned Is in disequilibrium and experiencing an expansionary gap c. d. Is in disequilibrium and inventories are higher than planned 18. Consider the Keynesian model discussed in class. If the re is a contractionary gap, then the economy: a. Is in equilibrium and inventories are higher than planned b. Is in equilibrium and experiencing cyclical unemployment c. Is in disequilibrium and inventories are lower than planned d. Is in disequilibrium and experiencing cyclical unemployment 19. Which of the following best describes the different characteristics of the Keynesian model and the aggregate demand/aggregate supply (AD/AS) model discussed in class? a. In both the Keynesian and AD/AS models prices are fixed in the long run. b. In both the Keynesian and AD/AS models prices are fixed in the short run. c. In both the Keynesian and AD/AS models the inflation rate is zero at equilibrium d. In both the Keynesian and AD/AS models prices are fixed in the long run but not in the short run
20. Which of the following best describes the different characteristics of long run equilibrium in the aggregate demand/aggregate supply (AD/AS) model and the Solow-Swan model discussed in class? a. In both the Solow-Swan and AD/AS models, the level of output is fixed at equilibrium. b. In both the Solow-Swan and AD/AS models, the level of output is not fixed at equilibrium c. In the Solow-Swan model the level of output is not fixed at equilibrium while in the AD/AS model, the level of output is fixed at long run equilibrium. d. In the Solow-Swan model, the level of output is fixed at equilibrium while in the AD/AS model the level of output is not fixed at long run equilibrium.
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17. The Aggregate Expenditure (AE) Keynesian model explains the output gap that exist times when the Planned Aggregate expenditure (PAE) does not equal Y or AE. Thus, there is a situation of disequilibrium. And in this situation (where, PAE>Y) then it would be said that there are too many products left and inventories are higher than planned. Thus, option D is correct.

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