-Based on This Aggregate Supply and Aggregate Demand Figure, Which

Multiple Choice

-Based on this aggregate supply and aggregate demand figure, which statement best describes the classical economic viewpoint?

A) Aggregate supply would shift to the left if prices and wages rose from P₂W₂ to P₁W₁.
B) If prices and wages were at P₁W₁ and aggregate demand were AD₂, prices and wages would fall to P₂W₂.
C) The economy would be operating at full employment if prices and wages were at P₁W₁ and aggregate demand was AD₂.
D) If prices and wages were at P₂W₂ and aggregate demand was AD₂, an increase in prices and wages to P₁W₁ would cause demand-pull inflation.