Consider the Following News Headline: "Threat of Widespread Labour Unrest

Multiple Choice

Consider the following news headline: "Threat of widespread labour unrest leads to generous wage increases in several industries." Choose the statement below that best describes the likely macroeconomic effects.

A) The AS curve shifts to the left; the price level rises and real GDP falls.
B) The AS curve shifts to the right; the price level falls and real GDP rises.
C) The AD curve shifts to the left; the price level falls and real GDP falls.
D) The AD curve shifts to the right; the price level rises and real GDP rises.
E) The AD and AS curves both shift to the left; the effect on the price level is indeterminate and real GDP falls.