Table 16-2 -Refer to Table 16-2.Consider the Hypothetical Information in the Table

question 93

Multiple Choice

Table 16-2

-Refer to Table 16-2.Consider the hypothetical information in the table above for potential real GDP,real GDP,and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy.If Congress and the president want to keep real GDP at its potential level in 2017,they should

• A)buy Treasury securities.
• B)conduct expansionary fiscal policy.
• C)decrease government purchases.
• D)decrease the discount rate.

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Definitions:

Entire Economy

All the economic activities and interactions that take place within a country, including production, consumption, investment, and trade.

Individual Stock

A share representing ownership in a specific company, entitling the holder to a claim on part of the company’s assets and earnings.

Bond Owners

Individuals or entities that hold bonds, which are debt securities, issued by corporations or governments.