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 terms of this diagram, the long-run aggregate supply curve Multiple Choice is a vertical line extending from Qf upward through e, b, and d. is a horizontal line extending from P2 rightward through f, b, and g. may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3. is AS2.
The horizontal axis is labeled real output. Points Q 1, Q subscript f, and Q 2 are marked on the horizontal axis from left to right. The vertical axis is labeled price level. Points P 1, P 2, and P 3 are marked on the vertical axis from bottom to top. A rising line labeled A S 1 begins at the bottom left, passes through e (Q subscript f, P 1) and g (Q 2, P 2), and ends at the top-right. Another rising line labeled A S 2 begins at a point that is above the starting point of A S 1 passes through a (Q 1, P 1), b (Q subscript f, P 2), c (Q 2, P 3), and ends at a point that is above the ending point of A S 1. Another rising line labeled A S 3 begins at a point that is above the starting point of A S 2 passes through f (Q 1, P 2), d (Q subscript f, P 3), and ends at a point that is above the ending point of A S 2.
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 terms of this diagram, the long-run
Multiple Choice
is a vertical line extending from Qf upward through e, b, and d.
is a horizontal line extending from P2 rightward through f, b, and g.
may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3.
is AS2.
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