Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: Short- and Long-Run Equilibrium II
-(Figure: Short- and Long-Run Equilibrium II) Look at the figure Short- and Long-Run Equilibrium II. Which of the following would be the appropriate response on the part of the government upon viewing the state of the economy?

A) Increase government spending to close the recessionary gap.
B) Decrease government spending to close the recessionary gap.
C) Lower tax rates to close the inflationary gap.
D) Raise tax rates to close the inflationary gap.