Suppose the Following Table Illustrates the Values of Real and Potential

question 50

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 its current policy to be more contractionary or expansionary.

If the RBA wants to keep real GDP at its potential level in 2018, should the RBA use a contractionary or expansionary policy? Should it raise or lower its interest rate target? How should it conduct open market operations to achieve its goal?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

---

Definitions:

Condensed Form

A representation of information or a work that has been shortened or summarized, focusing on essential elements.

Main Ideas

Main ideas refer to the central or most important thoughts or messages conveyed in a text or conversation.

Particular Position

A specific location or stance taken by someone or something in a defined context.

Point Out

To draw attention to something or someone, typically by means of indication or explanation.