Consider the hypothetical information in the following table for potential GDP,real GDP and the price level in 2013 and in 2014 if the government does not use fiscal policy. If the government wants to keep real GDP at its potential level in 2014,it should
A) decrease income taxes.
B) decrease government purchases.
C) decrease interest rates.
D) increase interest rates.

Question

Consider the hypothetical information in the following table for potential GDP,real GDP and the price level in 2013 and in 2014 if the government does not use fiscal policy.  If the government wants to keep real GDP at its potential level in 2014,it should
A) decrease income taxes. 
B) decrease government purchases. 
C) decrease interest rates. 
D) increase interest rates.

Quizplus · Accepted Answer

The Answer of Consider the hypothetical information in the following table for potential GDP,real GDP and the price level in 2013 and in 2014 if the government does not use fiscal policy.  If the government wants to keep real GDP at its potential level in 2014,it should
A) decrease income taxes. 
B) decrease government purchases. 
C) decrease interest rates. 
D) increase interest rates.

Consider the Hypothetical Information in the Following Table for Potential