When there is a recessionary gap,inflation will __________,in response to which the Bank of Canada will ________ real interest rates,and output will _________.
A) decrease;raise;decrease
B) decrease;lower;increase
C) decrease;lower;decrease
D) increase;raise;decrease
E) increase;lower;increase

Question

Quizplus · Accepted Answer

In a recessionary gap, inflation typically decreases due to lower demand. The Bank of Canada may lower real interest rates to stimulate borrowing and spending, which can help increase output.

When There Is a Recessionary Gap,inflation Will __________,In Response to Which