In the Long Run, Inflationary and Recessionary Gaps Are Self-Correcting

Multiple Choice

In the long run, inflationary and recessionary gaps are self-correcting because eventually:

A) nominal wages rise to close an inflationary gap or fall to close a recessionary gap.
B) the government applies the right combination of fiscal and monetary policies.
C) the multiplier compensates for the negative supply or demand shocks.
D) nominal wages rise to close a recessionary gap and fall to close an inflationary gap.