The Trump administration, reversing course from its campaign rhetoric, adopts sweeping

regulations that cause a permanent decline in productivity. You would predict using the AD-AS model that

A) the ensuing supply shock would lead to an immediate fall in inflation

B) in the short-run this would create negative output gap but eventually the previous general

equilibrium would be restored by subsequent rightward shifts of the AD curve

C) there would be a permanent change in the level of potential output

D) the ensuing supply shock would create positive output gap in the short run

E) the rate of inflation would fall