Refer to the Above Graph

question 57

Multiple Choice

Refer to the above graph.Assume that the economy is at equilibrium at AD₁ and AS₁ and then is hit with both demand-pull and cost-push inflation.If this occurs, then, in the short run:

• A)AD₁ will shift to AD₂, AS₂ will shift to AS₃, the price level will be at P₂, and output will be at Q₂.
• B)AS₁ will shift to AS₃, AD₂ will shift to AD₁, the price level will be at P₃, and output will be at Q₃.
• C)AD₁ will shift to AD₂, AS₁ will shift to AS₂, the price level will be at P₂, and output will be at Q₂.
• D)AD₁ will shift to AD₂, AS₁ will shift to AS₂, the price level will be at P₃, and output will be at Q₁.