Use the Following to Answer Questions

question 76

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 Y_P 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.

---

Definitions:

Logical Definition

A precise explanation of a term or concept based on its essential attributes and its distinction from related terms.

Genus

A major classification category situated above species and beneath family, employed in the categorization of both living and extinct life forms.

Circularity

A reasoning error where the conclusion is included in the premises or assumed in one of the premises.

Referents

Objects or events in the world that words or phrases refer to or signify.