Use the Following to Answer Questions

question 102

Multiple Choice

Use the following to answer questions .
Exhibit: Short-run Aggregate Supply
-(Exhibit: Short-run Aggregate Supply) Suppose that the economy is in long-run equilibrium at point A. Now suppose the stock market crashes, significantly reducing household wealth. In the short-run,

• A) the nominal wage rate falls.
• B) unemployment is above its natural level.
• C) there will be pressure on prices to rise.
• D) the short-run aggregate supply curve shifts to the left as firms cut production.