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Consider the accompanying diagram and fill in the blanks in the paragraph below.

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Suppose the economy is currently at Point B in the diagram. The classical process in which the economy would return to its long-run level of output is as follows: since
Select Option employmentwagesoutput
is/are flexible, it/they would
Select Option risefall
in the face of a shortage of labor causing the
Select Option long-run aggregate supply curveshort-run aggregate supply curveaggregate demand curve
to shift left. This process would occur until the economy reaches a new long-run equilibrium at
Select Option Point APoint BPoint C
with a price level of
Select Option 100120
.
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