Refer to Table 27-2. Consider the hypothetical information in the ...

[imowrer]

Refer to Table 27-2. 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 the discount rate. B) decrease government purchases.
  C) conduct expansionary fiscal policy. D) buy Treasury securities.

Question 2

What impact does a higher price level have on interest rates, wealth, and investment spending?
 
  What will be an ideal response?

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Answer to Question 1

B

Answer to Question 2

A higher price level reduces the purchasing power of wealth, increases interest rates, and reduces investment spending.

[imowrer]

TYSM

[kjohnson]

Thanks for the timely response, appreciate it