Assuming Prices and Wages Are Flexible, a Recession Will Decrease

Multiple Choice

Assuming prices and wages are flexible, a recession will decrease the price level, which:

A) raises nominal wages, and which eventually decreases the short-run aggregate supply curve, thus decreasing real output to its original level.
B) raises nominal wages, and which eventually increases the short-run aggregate supply curve, thus increasing real output to its original level.
C) reduces nominal wages, and which eventually decreases the short-run aggregate supply curve, thus decreasing real output to its original level.
D) reduces nominal wages, and which eventually increases the short-run aggregate supply curve, thus increasing real output to its original level.