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

Multiple Choice

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