Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions .
Exhibit: Supply-Side Economics
-(Exhibit: Supply-Side Economics) At income level Y₁, there is a(n)

A) inflationary gap, and expansionary policies may be initiated.
B) recessionary gap, and contractionary policies may be initiated.
C) recessionary gap.
D) recessionary gap, and the Fed is likely to decrease the money supply.