-Refer to the Above Diagram

Multiple Choice

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In terms of this diagram,the long-run aggregate supply curve:

A) is AS₂.
B) is a vertical line extending from Q_f upward through 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 f,b,and g.