If the Economy Begins at Full Employment and Then Aggregate

Multiple Choice

If the economy begins at full employment and then aggregate demand decreases,

A) potential GDP decreases to fill the resultant deflationary gap.
B) a recessionary gap is created and the AS curve shifts rightward as the money wage rate falls.
C) a recessionary gap is created shifting the AD curve rightward.
D) an inflationary gap is created shifting the AS curve leftward as the money wage rate rises.
E) an inflationary gap is created shifting the AD curve rightward.