When the price level rises, the long-run aggregate supply curve...

Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.

A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower

If a firm increases its capital stock, real wages will likely ________ and the equilibrium quantity of labor will likely ________

A) decrease; decrease B) increase; increase C) decrease; increase D) increase; decrease