Suppose the Following Table Illustrates the Values of Real and Potential

question 23

Essay

Suppose the following table illustrates the values of real and potential GDP and the price level, if the Reserve Bank of Australia (RBA)does not change their current policy to be more contractionary or expansionary. Suppose that the RBA uses an appropriate policy and is successful in keeping real GDP at its potential level in 2018.

State whether each of the following will be higher or lower than if the RBA had taken no action:
a.Real GDP.
b.Potential GDP.
c.The price level.
d.The unemployment rate.
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Definitions:

Hammers

A tool typically used for driving nails into, or pulling them from, some other object. Generally, it involves a handle and a head.

Percent More

A comparative term describing an increase in quantity or amount expressed as a percentage over a referenced baseline value.

Average Selling Price

The average price at which a particular product is sold across different markets or channels.

Decreased By

A mathematical operation indicating subtraction or reduction in quantity or amount.