If Short-Run Equilibrium Output Equals 20,000 and Potential Output (Y*)equals

Multiple Choice

If short-run equilibrium output equals 20,000 and potential output (Y*) equals 25,000, then this economy has a(n) ________ gap that can be closed by ________.

A) recessionary; increasing taxes
B) expansionary; increasing transfer payments
C) expansionary; increasing government purchases
D) recessionary; increasing government purchases