When the Macroeconomic Equilibrium Is Such That Real GDP Is

Multiple Choice

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from ________ and the government policy to eliminate this gap will ________ real GDP and to ________ the price level.

A) a recessionary gap; decrease; decrease
B) an inflationary gap; increase; decrease
C) a recessionary gap; increase; increase
D) an inflationary gap; decrease; increase
E) a recessionary gap; decrease; increase