Problem 1:

Potential . Real Price Year Real GDP Level GDP 35 14.0 $ 2022 , , 14.0 150 trillion , , trillion $ 14.5 $ 2023 , , 14.2 152 trillion , , trillion Refer to the table above. Consider the hypothetical information in the table above for potential real GDP, real GDP and the price level in 2022 and in 2023 if the Federal Reserve does not use monetary policy. Suppose the Fed wants to keep real GDP at its potential level in 2023. What monetary policy tool should it use? buy Treasury securities sell Treasury securities increase the required reserve ratio increase income taxes The larger the fraction of an investment nanced by borrowing (using leverage), " the greater the potential return and potential loss on that investment. " the smaller the potential return and potential loss on that investment. the greater the potential return and the smaller the potential loss on that investment. the smaller the potential return and the greater the potential loss on that investment