Author Question: Refer to Table 15-2. Consider the hypothetical information in the table above for potential real ... (Read 26 times)

laurencescou · **on:** Jun 29, 2018

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

Question 2

Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 30,000 units

A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low.
B) producers should raise the price to 3 in order to sell the quantity demanded of 30,000.
C) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently high.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.