Question 1
Table 15-3
Refer to Table 15-3. 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
◦ buy Treasury securities.
◦ sell Treasury securities.
◦ decrease the required reserve ratio.
◦ decrease income taxes.
Question 2
Table 15-3
Refer to Table 15-3. 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 uses monetary policy successfully to keep real GDP at its potential level in 2017, which of the following will be lower than if the Fed had taken no action?
◦ real GDP and the unemployment rate
◦ real GDP and the inflation rate
◦ real GDP and potential GDP
◦ potential GDP and the inflation rate
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