When the central bank undertakes a monetary tightening,the resulting __________ leads to an eventual __________,represented by a __________ shift in the inflation adjustment line.
A) expansionary gap;decline in inflation;downward
B) expansionary gap;rise in inflation;downward
C) recessionary gap;decline in inflation;upward
D) recessionary gap;rise in inflation;upward
E) recessionary gap;decline in inflation;downward

Question

Quizplus · Accepted Answer

Monetary tightening typically leads to a recessionary gap, which eventually results in a decline in inflation, represented by a downward shift in the inflation adjustment line.

When the Central Bank Undertakes a Monetary Tightening,the Resulting __________