When the Macroeconomic Equilibrium Is Such That Real GDP Is

Multiple Choice

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from _{--------------------}, and the government policy to eliminate this gap will _{--------------------}real GDP and to_{--------------------} the price level.

A) a recessionary gap; increase; increase
B) an inflationary gap; increase; decrease
C) a recessionary gap; decrease; increase
D) a recessionary gap; decrease; decrease
E) an inflationary gap; decrease; increase