Refer to the accompanying figure. 
Starting from long-run equilibrium at point C, a favorable inflation shock that decreases inflation from π to π¹ will lead to a short-run equilibrium at point ________ creating ________ gap.
Definitions:
Scientific Method
A systematic process for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge.
Human Values
Fundamental beliefs that guide or motivate attitudes or actions, reflecting what is important in life.
Direct Replication
The process of reproducing a scientific finding by repeating the same methods and measures used in the original research study.
Stereotype Threat
The risk of confirming negative stereotypes about one's group, leading to underperformance on a task.
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