If the Reserve Bank of Australia (RBA) did not use any form of
monetary policy intervention, then the potential GDP, real
GDP, and the price level in the Australian economy in 2015 would be
the values given in the table below. However, if the RBA uses
monetary policy successfully to keep real GDP at its potential
level in 2015, what would be the effect on the price level and the
unemployment rate?
Year
Potential GDP
Real GDP
Price Level
Unemployment rate
2015
$1.4 trillion
$1.62 trillion
155
6%
The price level will be higher than 155, and
the unemployment rate will be higher than 6%.
The price level will be lower than 155, and
the unemployment rate will be lower than 6%.
The price level will not be affected, and
the unemployment rate will be higher than 6%.
The price level will be lower than 155, and the unemployment
rate will be higher than 6%.
The price level will be higher than 155, and
the unemployment rate will be lower than 6%.
If the Reserve Bank of Australia (RBA) did not use any form of monetary policy intervention, then the potential GDP, rea
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