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by | Nov 29, 2023 | economics

Consider the hypothetical information in the following table for potential GDP, real GDP and the price level in 2013 and in 2014 if the government does notuse fiscal policy.YearPotential GDPReal GDPPrice Level2013$1.5 trillion$1.5 trillion1502014$1.7 trillion$1.6 trillion152If the government wants to use fiscal policy to keep real GDP at its potential level in 2014, it should:increase interest rates.Odecrease government purchases.Odecrease transfer payments.Odecrease interest rates.Odecrease income taxes.

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