Assume That Because of a Long Policy Lag,the Fed Starts

Multiple Choice

Assume that because of a long policy lag,the Fed starts implementing expansionary monetary policy too late,i.e.,at a time when the economy is already healing itself.As a result,the economy will probably move from an initial

A) recessionary gap to an even deeper recessionary gap.
B) recessionary gap to an inflationary gap.
C) inflationary gap to the natural level of Real GDP.
D) inflationary gap to a recessionary gap.