Refer to Table 27-1. Consider the hypothetical information in the ...

[TVarnum]

Refer to Table 27-1. 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) increase the level of interest rates. B) decrease the money supply.
  C) decrease government purchases. D) decrease income taxes.

Question 2

What is the difference between aggregate expenditure and aggregate demand?
 
  What will be an ideal response?

[lucas dlamini]

Answer to Question 1

D

Answer to Question 2

Aggregate expenditure is the total amount of spending in the economy and aggregate demand is the relationship between the price level and the level of planned aggregate expenditure.