If the Fed decides to tighten monetary policy because the inflation rate has risen to a level inconsistent with economic efficiency and long-term growth:
A. in the short run the AD curve shifts to the left and a recessionary gap is created.
B. in the short run the AD curve shifts to the right and a recessionary gap is created.
C. in the short run the SRAS curve will shift downward and a recessionary gap is created.
D. in the long run the AD curve will shift to the left and the long-run equilibrium is restored.
Answer: A
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