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 (b) , to return to potential output at YP policy makers should use:
A) contractionary stabilization policy.
B) expansionary stabilization policy.
C) policies to shift the SRAS to the left.
D) policies to shift the LRAS to the left.
Correct Answer:

Verified
Correct Answer:
Verified
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