Slope is measured as run/rise

The inflation rate

a. explains how prices are reacting to economic policies b. indicates the level of prices charged by all firms in the economy c. measures the annual percent increase in the average level of prices d. measures how fast wages and incomes are rising e. determines the prices that firms will offer to customers

Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.

A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower