Figure 7-3 -Refer to Figure 7-3. Suppose That the Economy Is in Economy

Multiple Choice

Figure 7-3
-Refer to Figure 7-3. 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.