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Assume you believe in a self regulating economy. What happens when an economy is in a recessionary gap?a. the labor market has a shortage, which increases the wage rate. Cost of production therefore decreases, shifting the SRAS to the left until the economy reaches natural real GDPb. the labor market has a surplus, which pulls down the wage rate. Cost of production therefore increases, shifting the SRAS to the left until the economy reaches natural real GDPc. the labor market has a shortage, which increases the wage rate. Cost of production therefore increases, shifting the SRAS to the left until the economy reaches natural real GDPd. the labor market has a surplus, which pulls down the wage rate. Cost of production therefore falls, shifting the SRAS to the right until the economy reaches natural real GDP

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