Refer to Figure 17.5.In this figure,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?
A) Decrease income taxes
B) Increase government spending
C) Buy financial securities
D) Sell financial securities
If the Reserve Bank of Australia's policy is described as 'contractionary',then it would
A) use open market operations to buy financial securities.
B) use open market operations to sell financial securities.
C) reduce the overnight cash rate.
D) increase the level of liquidity in the financial market.
In which of the following situations would the Reserve Bank of Australia conduct contractionary monetary policy?
A) The RBA believes that aggregate demand was growing too slowly to keep up with potential GDP.
B) The RBA fears that unemployment is climbing above the natural rate of unemployment.
C) The RBA is concerned that aggregate demand would continue to exceed the growth in potential GDP.
D) The RBA is worried that deflation will become a problem.
Consider the hypothetical information in Table 17.2 for potential GDP,real GDP and the price level in 2016 and in 2017 if the Reserve Bank of Australia (RBA)does not use monetary policy.If the RBA wants to keep real GDP at its potential level in 2017,it should
A) buy government securities.
B) sell government securities.
C) decrease interest rates.
D) decrease income taxes.