Starting from a long-run equilibrium, a reduction in potential output leads to _____ gap in the short run and to ___ rates of inflation in the long run.Group of answer choicesan expansionary; lowerno output; higheran expansionary; highera recessionary; higher

To achieve long-run equilibrium in an economy with a recessionary gap, output will ______ and the inflation rate will _____.

At long-run equilibrium, inflation _______ and output equals ______.

At long-run equilibrium, inflation _______ and output equals ______.Group of answer choicesequals the value determined by past expectations and pricing decisions; potential output.equals the value determined by past expectations and pricing decisions; the level of short-run equilibrium output consistent with that inflation rateis stable; potential output.equals the value consistent with potential output; the level of output consistent with zero inflation

A tax cut that affects both aggregate demand and potential output is predicted to _____ the long-run equilibrium level of output, while inflation _____. Group of answer choicesdecrease; decreasesincrease; increasesincrease; decreasesincrease; may increase, decrease or remain unchanged

If policymakers attempt to offset an adverse inflation shock with monetary _____, the resulting long-run equilibrium will be at _____ inflation rate compared with allowing the self-correcting mechanism to return the economy to potential output.Group of answer choiceseasing; a lowertightening; a highertightening; a lowereasing; a higher