Refer to the Diagram Given Below

question 69

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 long run, an increase in the price level from P₂ to P₃ will:

• A)increase the real output from Q_f to Q₂.
• B)shift the aggregate supply curve from AS₂ to AS₁.
• C)decrease the real output from Q₂ to Q₁.
• D)not change the level of real output.

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