Suppose That the Short-Run Macroeconomic Equilibrium Occurs in the Upward-Sloping

Multiple Choice

Suppose that the short-run macroeconomic equilibrium occurs in the upward-sloping range of the short-run aggregate supply curve. If the government increases the federal income tax, then in the short run, _____ will fall. However, in the long run, the _____ will return to the level that it was prior to the imposition of the tax.

A) the price level and output; output
B) output and nominal wages; price level
C) the real wage and output; nominal wage
D) the nominal wage and the price level; real wage