Refer to Table 16.2 for the following questions.
Table 16.2

-Consider the hypothetical information in Table 16.2 for potential GDP,real GDP and the price level in 2012 and in 2013 if the Reserve Bank of Australia (RBA)does not use monetary policy.If the RBA wants to keep real GDP at its potential level in 2013,it should

Question

Refer to Table 16.2 for the following questions.
Table 16.2
 
-Consider the hypothetical information in Table 16.2 for potential GDP,real GDP and the price level in 2012 and in 2013 if the Reserve Bank of Australia (RBA)does not use monetary policy.If the RBA wants to keep real GDP at its potential level in 2013,it should

Quizplus · Accepted Answer

According to the table, real GDP is already at the potential level in 2012. Therefore, in order to keep real GDP at its potential level in 2013, the RBA needs to reduce aggregate demand by decreasing spending or increasing taxes. Selling government securities would reduce the money supply, increase interest rates and decrease spending.

Refer to Table 16.2 for the Following Questions