Which of the Following Occurs When an Expansionary Gap Is

Multiple Choice

Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?

A) Output decreases,and the price level increases.
B) Inflation decreases,and unemployment rises.
C) Both the equilibrium output and the price level increase.
D) Both the equilibrium output and the price level decrease.
E) Inflation rises,and unemployment decreases