-Refer to the Above Diagram

question 110

Multiple Choice

-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 Q _f.In the short run,an increase in the price level from P₂ to P₃ will:

• A) change aggregate supply from AS₂ to AS₃.
• B) increase real output from Q₁ to Q₂.
• C) change aggregate supply from AS₂ to AS₁.
• D) increase real output from Q_f to Q₂.

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Definitions:

Monopsonist

A market condition where there is only one buyer facing many sellers, often leading to lower prices for suppliers.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a factor, such as labor or capital, holding all other factors constant.

Product Market

The marketplace where final goods or services are offered to consumers, businesses, and the public sector.

Tax Imposed

The act of levying or enforcing a financial charge or other levy upon a taxpayer by a governmental organization.