Table 26-6 -Refer to Table 26-6

question 16

Essay

Table 26-6
$$\begin{array} { | l | l | l | c | } \hline \text { Year } & \text { Potential Real GDP } & { \text { Real GDP } } & \text { Price Level } \\\hline 2016 & \$ 18.1 \text { trillion } & \$ 18.1 \text { trillion } & 150 \\\hline 2017 & 18.4 \text { trillion } & 18.6 \text { trillion } & 155 \\\hline\end{array}$$
-Refer to Table 26-6.Suppose the table above illustrates the values of real and potential GDP and the price level if the Fed does not vote to change their current policy to be more contractionary or expansionary.If the Fed wants to keep real GDP at its potential level in 2017,should the Fed 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?

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Definitions:

Transitional

Pertaining to or involving change from one state, condition, or phase to another.

Probabilistic

Pertains to the likelihood of occurrences in a random phenomenon and involves the analysis of outcomes utilizing the principles of probability.

Management Inventories

Tools or systems used to assess and catalog the abilities, skills, and potential of managerial staff within an organization.

Markov Models

A statistical model used to predict a system's future behavior based on its current state, often used in decision making and predicting behavior patterns over time.