What is meant by an inflationary gap? State any two monetary measures to correct the situation of an inflationary gap.

a) An inflationary gap occurs when aggregate demand exceeds aggregate supply. Monetary measures to correct it include raising interest rates and reducing money supply.
b) An inflationary gap occurs when aggregate supply exceeds aggregate demand. Monetary measures to correct it include lowering interest rates and increasing money supply.
c) An inflationary gap occurs when both aggregate demand and aggregate supply decrease. Monetary measures to correct it include increasing government spending and reducing taxes.
d) An inflationary gap occurs when both aggregate demand and aggregate supply increase. Monetary measures to correct it include reducing government spending and increasing taxes.