Table 16-3

-Refer to Table 16-3.Consider the hypothetical information in the table above for potential real GDP,real GDP,and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy.If Congress and the president use fiscal policy successfully to keep real GDP at its potential level in 2017,which of the following will be higher than if Congress and the president had taken no action?

Question

Table 16-3
 
-Refer to Table 16-3.Consider the hypothetical information in the table above for potential real GDP,real GDP,and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy.If Congress and the president use fiscal policy successfully to keep real GDP at its potential level in 2017,which of the following will be higher than if Congress and the president had taken no action?

Quizplus · Accepted Answer

If Congress and the president successfully use fiscal policy to keep real GDP at its potential level in 2017, real GDP will be higher than if they take no action, but the price level will also be higher. Therefore, the answer is option B, where real GDP and the inflation rate will both be higher compared to taking no action.

Table 16-3 -Refer to Table 16-3.Consider the Hypothetical Information in the Table