Suppose the Following Conditions Are Present in the Economy

Suppose the following conditions are present in the economy:
- firms are facing lower-than normal sales and have reduced output
-there is an excess supply of labour and firms are starting to reduce their workforces
Which of the following statements describes the adjustment that will happen in the AD/AS macro model?

A) Output is below potential; aggregate demand will fall, causing the AD curve to shift to the left. The price level will fall until equilibrium is restored at Y*.
B) The economy is in equilibrium at Y*, but wages are falling. The AS curve will shift to the right until a new equilibrium is reached at a lower price level.
C) Output is below potential; wages will eventually fall; the AS curve will slowly shift to the right until equilibrium is restored at Y*.
D) Output is above potential; wages will fall, causing the AS curve to shift to the right until equilibrium is restored at Y*.
E) Output is above potential; aggregate demand will fall, causing the AD curve to shift to the left until equilibrium is restored at Y*.