Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade.However,monetary policymakers are slow to recognize that the change is to potential,not current,output,and interpret the decrease in output as a recession that leads current to fall below potential output.In this scenario,policymakers believe that __________ pressures are building and incorrectly respond by __________ interest rates,sending the economy into a(n)___________ gap.
A)inflationary;raising;inflationary
B)inflationary;reducing;inflationary
C)inflationary;raising;recessionary
D)recessionary;reducing;inflationary
E)Not enough information is given.

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The Answer of Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade.However,monetary policymakers are slow to recognize that the change is to potential,not current,output,and interpret the decrease in output as a recession that leads current to fall below potential output.In this scenario,policymakers believe that __________ pressures are building and incorrectly respond by __________ interest rates,sending the economy into a(n)___________ gap.
A)inflationary;raising;inflationary
B)inflationary;reducing;inflationary
C)inflationary;raising;recessionary
D)recessionary;reducing;inflationary
E)Not enough information is given.

Suppose an Economy Exhibits a Large Unexpected Decrease in Productivity