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Suppose a Recessionary Gap Is Closed in the Long Run

Question 92

Multiple Choice

Suppose a recessionary gap is closed in the long run, by means of a passive policy.How will output and price level be affected?  


A)  Output will increase, and price level will increase. 
B)  Output will increase, and price level will decrease. 
C)  Output will decrease, and price level will increase. 
D)  Output will decrease, and price level will decrease.

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