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 short run, an increase in the price level from P₂ to P₃ will: A)shift the aggregate supply curve from AS₂ to AS₃. B)increase the real output from Q₁ to Q₂. C)shift the aggregate supply curve from AS₂ to AS₁. D)increase the real output from Q_f to Q₂.

Question

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The Answer of 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 short run, an increase in the price level from P₂ to P₃ will: A)shift the aggregate supply curve from AS₂ to AS₃. B)increase the real output from Q₁ to Q₂. C)shift the aggregate supply curve from AS₂ to AS₁. D)increase the real output from Q_f to Q₂.

Refer to the Diagram Given Below