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Refer to the Diagram AS2 to AS3\mathrm { AS } _ { 2 } \text { to } \mathrm { AS } _ { 3 }

Question 176

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Refer to the diagram. Assume that nominal wages initially are set based on 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 short run, costpush inflation could best be shown as A) a leftward shift of aggregate supply from A \mathrm { AS } _ { 2 } \text { to } \mathrm { AS } _ { 3 } B) a move from b to c on A \mathrm { AS } _ { 2 }. C) a move from b to c to d. D) a move from b to f to d.
Refer to the diagram. Assume that nominal wages initially are set based on the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, costpush inflation could best be shown as


A) a leftward shift of aggregate supply from A AS2 to AS3\mathrm { AS } _ { 2 } \text { to } \mathrm { AS } _ { 3 }
B) a move from b to c on A AS2.\mathrm { AS } _ { 2 }.
C) a move from b to c to d.
D) a move from b to f to d.

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