Table 18-4 -Refer to Table 18-4

question 261

Multiple Choice

Table 18-4
$\begin{array}{|c|c|c|c|}\hline \text { Year } & \text { Potential Real GDP } & \text { Real GDP } & \text { Price Level } \\\hline 2018 & \$ 18.0 \text { trillion } & \$ 18.0 \text { trillion } & 150 \\\hline 2019 & 18.5 \text { trillion } & 18.8 \text { trillion } & 154 \\\hline\end{array}$
-Refer to Table 18-4.Consider the hypothetical information in the table above for potential real GDP,real GDP,and the price level in 2018 and in 2019 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 2019,which of the following will be lower than if Congress and the president had taken no action?

• A) real GDP and the unemployment rate
• B) real GDP and the inflation rate
• C) real GDP and potential GDP
• D) potential GDP and the inflation rate

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Definitions:

Annual Coupons

The interest payments made to bondholders annually over the life of the bond.

Capital Structure

The composition of a company's liabilities and equity, outlining how a business finances its overall operations and growth.

Component Costs

The various expenses that make up the total cost of financing for a company, including the cost of debt and equity.

Market Values

The current price at which an asset or service can be bought or sold, determined by supply and demand.