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Question 219

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Use the following to answer questions :
Figure: Output Gap Use the following to answer questions : Figure: Output Gap -(Figure: Output Gap) Look at the figure Output Gap. If the economy is producing at Y<sub>1</sub>, then it has a(n) _____ gap, as _____ real GDP exceeds _____ real GDP, and the Federal Reserve should use _____ monetary policy. A) inflationary; actual; potential; contractionary B) recessionary; potential; actual; expansionary C) inflationary; potential; actual; contractionary D) recessionary; actual; potential; expansionary
-(Figure: Output Gap) Look at the figure Output Gap. If the economy is producing at Y1, then it has a(n) _____ gap, as _____ real GDP exceeds _____ real GDP, and the Federal Reserve should use _____ monetary policy.


A) inflationary; actual; potential; contractionary
B) recessionary; potential; actual; expansionary
C) inflationary; potential; actual; contractionary
D) recessionary; actual; potential; expansionary

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