The Financial Market Shock That Occurred During the Great Recession

Multiple Choice

The financial market shock that occurred during the Great Recession increased the default-risk premium,and the housing shock that also occurred during the recession reduced wealth and residential construction.These two events would result in

A) a positive output gap and a rising inflation rate.
B) a negative output gap and a rising inflation rate.
C) a positive output gap and a falling inflation rate.
D) a negative output gap and a falling inflation rate.