Suppose a recessionary gap is closed in the long run, by means of a passive policy.How will output and price level be affected?
A) Output will increase, and price level will increase.
B) Output will increase, and price level will decrease.
C) Output will decrease, and price level will increase.
D) Output will decrease, and price level will decrease.

Question

Suppose a recessionary gap is closed in the long run, by means of a passive policy.How will output and price level be affected?  
A) Output will increase, and price level will increase. 
B) Output will increase, and price level will decrease. 
C) Output will decrease, and price level will increase. 
D) Output will decrease, and price level will decrease.

Quizplus · Accepted Answer

The Answer of Suppose a recessionary gap is closed in the long run, by means of a passive policy.How will output and price level be affected?  
A) Output will increase, and price level will increase. 
B) Output will increase, and price level will decrease. 
C) Output will decrease, and price level will increase. 
D) Output will decrease, and price level will decrease.

Suppose a Recessionary Gap Is Closed in the Long Run