Table 15-2 -Refer to Table 15-2.Consider the Hypothetical Information in the Table

question 51

Multiple Choice

Table 15-2

-Refer to Table 15-2.Consider the hypothetical information in the table above for potential real GDP,real GDP,and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy.If the Fed wants to keep real GDP at its potential level in 2017,it should

• A)buy Treasury securities.
• B)sell Treasury securities.
• C)increase the required reserve ratio.
• D)increase income taxes.

---

Definitions:

Equilibrium Price

The cost at which the amount of a product or service that consumers want to buy matches the amount that producers are willing to sell, creating a balanced market situation.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various price levels, at a given point in time.

Supply

The total amount of a good or service available for purchase at any given price.

Surplus

The situation where the quantity of a good or service supplied exceeds the quantity demanded, often causing downward pressure on price.