Suppose the Following Table Illustrates the Values of Real and Potential

question 56

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 2014,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:

Article 9

Refers to a portion of the Uniform Commercial Code (UCC) that governs secured transactions in personal property.

Business

The organized efforts and activities of individuals to produce and sell goods and services for profit.

Consumer Goods

Items purchased for personal, family, or household use and enjoyment.

Bankruptcy Code

The set of laws in the United States that govern bankruptcy proceedings, providing for the resolution of insolvency issues.