Refer to Figure 12.4. As a result of the monetary policy taking effect

Refer to Figure 12.4. As a result of the monetary policy taking effect after the housing bubble had already burst, real GDP will be ________ potential GDP and the rate of inflation will be ________ the rate of inflation when the economy was initially

in equilibrium. A) greater than; greater than
B) greater than; less than
C) less than; less than
D) less than; equal to

ANSWER

C