Table 12.3
-Refer to Table 12.3.Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2017 and in 2018 if the federal government does not use fiscal policy.If the federal government wants to keep real GDP at its potential level in 2018, it should

Question

Table 12.3 
-Refer to Table 12.3.Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2017 and in 2018 if the federal government does not use fiscal policy.If the federal government wants to keep real GDP at its potential level in 2018, it should

Quizplus · Accepted Answer

If the government wants to keep real GDP at its potential level and the economy is above potential GDP, it should decrease government purchases to reduce aggregate demand and bring real GDP back to its potential level.

Table 12.3 -Refer to Table 12.3.Consider the Hypothetical Information in the Table