$Refer to the graph. Assume that the economy is initially at full-employment equilibrium at point A. If there is cost-push in?ation in this economy and the government pursues an expansionary ?scal Policy, then in the long run the A) price level will rise from P _ { 1 } \text { to } P _ { 2 } \text { and real output will be } Q _ { 2 } \text {. } B) price level will rise from P _ { 1 } \text { to } P _ { 3 } \text { and real output will be } Q _ { 1 } \text {. } C) price level will rise from P _ { 1 } \text { to } P _ { 2 } \text { and real output will be } Q _ { 3 } \text {. } D) price level will be P _ { 1 } \text { and real output will be } Q _ { 1 } \text {. }$ Refer to the graph. Assume that the economy is initially at full-employment equilibrium at point A. If there is cost-push in?ation in this economy and the government pursues an expansionary ?scal
Policy, then in the long run the
A) price level will rise from

P _ { 1 } \text { to } P _ { 2 } \text { and real output will be } Q _ { 2 } \text {. }

B) price level will rise from

P _ { 1 } \text { to } P _ { 3 } \text { and real output will be } Q _ { 1 } \text {. }

C) price level will rise from

P _ { 1 } \text { to } P _ { 2 } \text { and real output will be } Q _ { 3 } \text {. }

D) price level will be

P _ { 1 } \text { and real output will be } Q _ { 1 } \text {. }

In the Long Run

Multiple Choice

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