Consider the Hypothetical Information in the Following Table for Potential

question 23

Multiple Choice

Consider the hypothetical information in the following table for potential GDP,real GDP and the price level in 2013 and in 2014 if the government does not use fiscal policy. If the government wants to keep real GDP at its potential level in 2014,it should

• A) decrease income taxes.
• B) decrease government purchases.
• C) decrease interest rates.
• D) increase interest rates.

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Definitions:

Evidence

Information or facts presented in support or against a hypothesis or claim.

Drug

A substance used to diagnose, cure, treat, or prevent disease, or to enhance physical or mental well-being.

Hypotheses

Proposed explanations or predictions that are based on limited evidence as a starting point for further investigation.

Defective Components

Refers to parts or elements of a system that do not meet quality specifications or perform as intended.