Refer to the Diagram Given Below

question 182

Multiple Choice

Refer to the diagram given below. Assume that the nominal wages of workers 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, demand-pull inflation could best be shown as:

• A)a movement from point b to point c on AS₂.
• B)a movement from point b to point d.
• C)a shift of the aggregate supply curve from AS₂ to AS₃.
• D)a shift of the aggregate supply curve from AS₁ to AS₂.

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Definitions:

Gross Profit

Gross profit is the financial measure calculated by subtracting the cost of goods sold from revenue, indicating the efficiency in production and pricing.

LIFO Method

An inventory valuation method that assumes the last items placed in inventory are the first sold, known as Last-In, First-Out.

FIFO Method

A method of inventory valuation where the first items purchased are the first ones to be sold, standing for First In, First Out.

Inventory Valuation

The method or process by which the total value of a company's inventory is determined, based on the cost of goods, market value, or an agreed-upon valuation mechanism.