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:

Environmental Pollution

The contamination of the natural environment by pollutants causing adverse effects on living organisms and the ecosystem.

Environmental Regulations

Rules and standards implemented by governments to control pollution and protect the environment.

Annual Statement

A comprehensive report detailing a company’s financial performance over the previous year, including income, expenses, and profit or loss.

Drinking Water

Water that is safe and clean for human consumption, free from contaminants and pollutants.