Refer to the Diagram Given Below

question 18

Multiple Choice

Refer to the diagram given below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P₂ and that the economy is initially operating at the full-employment level of output Q_f.In the short run, an increase in the price level from P₂ to P₃ will:

• A)shift the aggregate supply curve from AS₂ to AS₃.
• B)increase the real output from Q₁ to Q₂.
• C)shift the aggregate supply curve from AS₂ to AS₁.
• D)increase the real output from Q_f to Q₂.

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Definitions:

Average Salary

The mean amount of payment received by employees in specific job roles, sectors, or regions, often used as a benchmark for wage comparisons.

Baseball Players

Individuals who play baseball professionally or as amateurs, participating in the sport as part of teams.

Median Cost

The middle value in a set of costs arranged in ascending or descending order; half the costs are above the median and half are below.

Total Damage

The entire extent of harm or injury, including all contributing forms of damage, typically in the context of accidents or natural disasters.