Table 15-2

-Refer to Table 15-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy.If the Fed wants to keep real GDP at its potential level in 2015,it should
A)buy Treasury securities.
B)sell Treasury securities.
C)increase the required reserve ratio.
D)increase income taxes.

Question

Table 15-2
 
-Refer to Table 15-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy.If the Fed wants to keep real GDP at its potential level in 2015,it should
A)buy Treasury securities. 
B)sell Treasury securities. 
C)increase the required reserve ratio. 
D)increase income taxes.

Quizplus · Accepted Answer

To keep real GDP at its potential level, the Fed should buy Treasury securities to increase the money supply, lower interest rates, and stimulate economic activity.

Table 15-2 -Refer to Table 15-2.Consider the Hypothetical Information in the Table