Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: Inflationary and Recessionary Gaps
-(Figure: Inflationary and Recessionary Gaps) Refer to Figure: Inflationary and Recessionary Gaps. If the economy is in short-run equilibrium at Y₁ in panel (a) , to return to potential output at Y_P policy makers should use:

A) contractionary policy.
B) expansionary policy.
C) policies to shift the SRAS to the left.
D) policies to shift the LRAS to the left.