What is the implication for government policy to address business cycles from the FEM?

A) Government can always increase real GDP by spending more or taxing less.

B) Government can never increase real GDP by spending more or taxing less

C) Government can only increase real GDP when crowding out occurs.

D) Government spending will affect real GDP but we do not know ahead of time which direction.

When the economy is on the short-run aggregate supply curve and to the right of the long-run aggregate supply curve, actual aggregate output will eventually equal potential output as:

A) nominal wages increase and the short-run aggregate supply curve shifts to the left.

B) the aggregate price level falls and the long-run aggregate supply curve shifts to the left.

C) nominal wages fall and the short-run aggregate supply curve shifts to the right.

D) the aggregate price level falls and the aggregate demand curve shifts to the right.