I need help solving the answer for this question, as well as the work shown to get the answer. I have attached the photo of the question.

14. Consider starting from full-employment equilibrium in our Aggregate Demand and Supply model (with flexible wages and worker misperception of price level changes in the short run), at Po, O/ on the output market graph below. Then we get an increase in Aggregate Demand from Agg Do to Agg D 1. P LR Agg S SR Agg S Agg D Agg D. We can say that a. In the long run, P and Q will return to original levels when workers perceive the decrease in P. b. at P1 , Q1, we are in a recessionary gap. c. P will increase further as employment cools down, and Q will decrease back to ON. d. Q will increase above Q 1 as employment increases (due to workers taking lower wages). e. none of the above. 105