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(34 marks) The hypothetical information in the following table shows what the situation will be in 2018 if the RBA does not use monetary policy.
(34 marks) The hypothetical information in the following table shows what the situation will be in 2018 if the RBA does not use monetary policy. YEAR POTANTIAL GDP REAL GDP PRICE LEVEL 2017 $1700 billion $1700 billion 110 2018 $1800 billion $1780 billion 114 If the RBA wants to keep real GDP at its potential level in 2018, should it use an expansionary policy or a contractionary policy? Should the RBA be buying financial securities or selling them? (10 marks)
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