Refer to the Diagram Below

question 134

Multiple Choice

Refer to the diagram 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 initially is operating at the full-employment level of output Q_f.In the short run, cost-push inflation could best be shown by a:

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

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Occurring in nature; not made or caused by humans.

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In a slow, step-by-step process, often used to describe how changes or developments occur over time.