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Figure 14.3.3 Refer to Figure 14.3.3, which shows an economy in which...

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Short Description: A line graph of price level versus real G D P. Long Description: The vertical axis is labelled, price level (G D P deflator) and ranges from 100 to 140 in increments of 10 with a kink near the bottom. The horizontal axis is labelled, real G D P (billions of 20 12 dollars) and ranges from 0 to 500 in increments of 100. The line for S A S slopes upward passing through the point (400, 110). The line for A D slopes downward passing through the point (400, 110) intersecting the line for S A S at this point. The line for L A S is a vertical line from 350 on the horizontal line intersecting the line for A D and S A S left to their point of intersection.

Figure 14.3.3

Refer to Figure 14.3.3, which shows an economy in which potential GDP is $350 billion. To return the economy to full employment, which of the following actions does the central bank take?

The central bank ________ the overnight rate target and ________ government securities.

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