The Harder the Fed Applies the Brakes of Restrictive Monetary

Multiple Choice

The harder the Fed applies the brakes of restrictive monetary policy in an attempt to reduce an excessive rate of inflation,

A) the larger is the resulting gap between actual and potential GDP in the short run.
B) the tighter is the spiral of recovery as the economy moves quickly toward equilibrium at a lower rate of inflation with a minimum of overshooting.
C) the wider is the spiral of recovery as the economy more-dramatically overshoots equilibrium on the low side of the long-run rate of inflation.
D) a and c only.
E) a and b only.