Table 16-1 -Refer to Table 16-1.Consider the Hypothetical Information in the Table

question 37

Multiple Choice

Table 16-1

-Refer to Table 16-1.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)decrease income taxes.
• B)decrease government purchases.
• C)decrease the money supply.
• D)increase the level of interest rates.

---

Definitions:

Merchandise

Goods that a company buys for resale to customers, encompassing a wide range of items sold by retailers.

Normal Credit Balance

The expected balance on the credit side of an account, indicating an increase in liabilities, revenue, or equity.

Sales Discounts

Reductions in the selling price offered by a seller to encourage prompt payment by the buyer.

Sales Returns

Transactions involving the return of goods by customers, which reduce the total sales revenue.