When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

Per capita real GDP is obtained by dividing real GDP by the number of people active in the labor force

a. True b. False Indicate whether the statement is true or false

Refer to the accompanying figure. Assume the market is originally at point W. Movement to point X is the result of: 

A. an increase in demand and an increase in quantity supplied. B. a decrease in supply and an increase in quantity demanded. C. an increase in supply and an increase in demand. D. an increase in supply and an increase in quantity demanded.