Consumer confidence in the economy rises and, as a result, real GDP increases above potential GDP. To move GDP back to potential GDP, the Reserve Bank of Australia should

Name: Consumer confidence in the economy rises and, as a result, real GDP increases above potential GDP. To move GDP back to potential GDP, the Reserve Bank of Australia should
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Question

Quizplus · Accepted Answer

Raising the cash rate would make borrowing more expensive, reducing spending and investment, which would help decrease real GDP back to its potential level.

Consumer Confidence in the Economy Rises And, as a Result