Which of the Following Adjustments Will Most Likely Occur When

Multiple Choice

Which of the following adjustments will most likely occur when output exceeds the economy's long-run capacity?

A) Prices will decline, bringing actual output into balance with its potential.
B) The natural rate of unemployment will increase and, thereby, restore equilibrium.
C) Higher resource prices and costs will reduce short-run aggregate supply until output falls to the economy's long-run capacity.
D) Lower interest rates will increase the economy's long-run capacity and restore equilibrium.