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-Refer to the Above Diagram

question 196

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  -Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P<sub>2</sub> and that the economy initially is operating at its full-employment level of output Q<sub>f</sub>.In the long run,demand-pull inflation could best be shown as: A)  a move from b to c on AS<sub>2</sub>. B)  a move from b to f to d. C)  a change of aggregate supply from AS<sub>2</sub> to AS<sub>1</sub>. D)  a move from b to d.
-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In the long run,demand-pull inflation could best be shown as:

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