Refer to the Diagram Given Below

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 initially is operating at the full-employment level of output Q_f.In the diagram, the long-run aggregate supply curve:

A) is represented by AS₂.
B) is a vertical line extending from Q_f upward through the points e, b, and d.
C) may be either AS₁, AS₂, or AS₃ depending on whether the price level is P₁, P₂, or P₃.
D) is a horizontal line extending from P₂ rightward through points f, b, and g.