Multiple Choice
Consider the hypothetical information in the following table for potential GDP, real GDP and the price level in 2016 and in 2017 if the government does not use fiscal policy.
If the government wants control inflation while keeping real GDP at its potential level in 2017, it should:
A) increase income taxes.
B) increase government purchases.
C) decrease interest rates.
D) increase interest rates.
Correct Answer:
Verified
Correct Answer:
Verified
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