Suppose a large number of new immigrant enter the labor market. Assume this increase in the labor supply provides a drag on nominal wage increases: nominal wages rise by less than the prevailing rate of inflation over the next year.How does the AD-AS framework respond to such a change?

a) The AD shifts to the right because of higher demand in the country and AS will shift to the left because the implied real wage has increased.

b) The AD shifts to the right because of higher demand in the country and the AS will shift to the right because the implied real wage has decreased.

c) The AD shifts to the left because of lower demand in the country and AS will shift to the left because the implied real wage has increased.

d) The AD shifts to the left because of lower demand in the country and the AS will shift to the right because the implied real wage has decreased.

e) There will be no movements in the AS and AD.