FIGURE 29-3 Refer to Figure 29-3. Suppose the economy is at E1 and that there is no policy response by the Bank of Canada to this recessionary gap. Compared to the price level and real GDP at E1, the economy will tend towards a new long-run equilibrium characterized by a(n) lower price level and GDP at the potential level. higher price level and GDP above the potential level. lower price level and GDP below the potential level. higher price level and GDP below the potential level. unchanged price level and GDP at the potential level