The Country of Glassen Has Experienced an Expansionary Gap for the Last

Multiple Choice

The country of Glassen has experienced an expansionary gap for the last three years. The advocates of passive policy believe that _____

A) the short-run aggregate supply will shift to the left to close the expansionary gap.
B) the short-run aggregate supply will shift to the right to close the expansionary gap.
C) rising prices will shift the aggregate demand curve to the left.
D) the price level will fall relatively quickly to close the expansionary gap.
E) the aggregate demand curve will shift to the right as wages increase.