Refer to the Figure Below

Multiple Choice

Refer to the figure below.Based on the diagram, if potential output equals 8,000 and the real interest rate is 2%, then there is ______ gap and the Fed must ______ the real interest rate so that output will equal potential output.

A) a recessionary; raise
B) an expansionary; reduce
C) no output; not change
D) an expansionary; raise