Which of the Following Is True of a Recessionary Gap

Multiple Choice

Which of the following is true of a recessionary gap?

A) Firms will increase output because Real GDP is below Potential GDP.
B) Firms will decrease output because the price level is low.
C) Firms have no incentive to produce more because they can't sell additional output.
D) Firms have no incentive to produce more because it's very expensive to employ more labour.
E) It is correctly described as "too much money chasing too few goods."