Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in consumer confidence about future economic conditions, what would we expect to happen?

a.In the short run, real GDP might fall, stay the same, or rise and the price will rise. In the long run, the price level might rise, fall, or stay the same, but real GDP will revert to potential GDP.

b.In the short run, real GDP will rise, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be lower.

c.In the short run, real GDP will rise, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be unaffected.

d.In the short run, real GDP will fall, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be lower.