Refer to the Accompanying Figure

Multiple Choice

Refer to the accompanying figure. An economy is currently in long-run equilibrium at point B, at an inflation rate of π', which is too high for to sustain economic growth. If an anti-inflationary policy is enacted, the economy will be in short-run equilibrium at point ________ creating ________ gap.

A) A; an expansionary
B) A; a recessionary
C) D; a recessionary
D) D; an expansionary