Consider the Hypothetical Information in the Following Table for Potential

question 40

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

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Definitions:

Real Number Line

A line that graphically represents all possible real numbers, where each point on the line corresponds to a unique real number.

Inequality

An inequality is a mathematical statement indicating that two expressions are not equal, represented by symbols such as > (greater than), < (less than), ≥ (greater than or equal to), or ≤ (less than or equal to).

Graphing Calculator

A handheld device capable of plotting graphs, solving equations, and performing other mathematical operations and visualizations.

Real Line

A linear continuum of points representing real numbers, effectively illustrating the concept of the infinite nature of real numbers on a one-dimensional scale.