Refer to the diagram below. 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 the short run, cost-push inflation could best be shown as: A) a leftward shift of aggregate supply from AS₂ to AS₃. B) a move from b to c on AS₂. C) a move from b to c to d. D) a move from b to f to d.

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The Answer of Refer to the diagram below. 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 the short run, cost-push inflation could best be shown as: A) a leftward shift of aggregate supply from AS₂ to AS₃. B) a move from b to c on AS₂. C) a move from b to c to d. D) a move from b to f to d.

Refer to the Diagram Below