LRAS P SRAS2 SRAS 4 2 AD2 ADI Yp Real GDP Start at equilibrium point 2 The economy is in a(n) (recessionary gap, inflationary gap) For monetary policy, the Fed should (raise, lower) the federal funds rate target. A With this monetary policy the new equilibrium is (1, 2, 3, 4) With this monetary policy the interest rate (rises, falls) With this monetary policy the money supply (rises, falls) A