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) decrease government purchases. B) buy Treasury securities.
C) decrease the discount rate. D) conduct expansionary fiscal policy.
Question 2
In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.
A) equals B) is less than
C) may be greater than or less than D) is greater than
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