Refer to Table 17 -Refer to Table 17

question 93

Multiple Choice

Refer to Table 17.1 for the following question.
Table 17.1
$$\begin{array} { | c | c | c | c | } \hline \text { Year } & \text { Potential GDP } & \text { Real GDP } & \text { Price Level } \\\hline 2016 & \$ 1.5 \text { trillion } & \$ 1.5 \text { trillion } & 150 \\\hline 2017 & \$ 1.6 \text { trillion } & \$ 1.52 \text { trillion } & 152 \\\hline\end{array}$$
-Refer to Table 17.1.Consider the hypothetical information in the table for potential GDP,real GDP and the price level in 2016 and in 2017 if the Reserve Bank of Australia does not use monetary policy.If the Reserve Bank of Australia wants to keep real GDP at its potential level in 2017,it should

• A) buy government securities.
• B) sell government securities.
• C) increase interest rates.
• D) increase income taxes.

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Definitions:

Elaboration

The addition of more detail or information to something, often to clarify or enhance understanding.

Visual Imagery

The process of forming mental pictures or images in one's mind, which can enhance memory, creativity, and understanding of concepts.

Baddeley's Model

A model of working memory proposed by Alan Baddeley, which consists of three main components: the central executive, the phonological loop, and the visuospatial sketchpad.

Working Memory

A mental mechanism with finite capabilities, aimed at briefly storing information for subsequent processing tasks.