AS2 AS, C Price Level R AD 2 AD Real Domestic Output Refer to the graph. Assume that the economy is initially at equilibrium at point A and the economy is at full employment. If there is an expansion in the economy and AD, shifts to AD2, and wages and prices are flexible, then in the long run the price level will be O P2 and real output will be Q1. O P1 and real output will be Q1. O P2 and real output will be Q1. O P3 and real output will be Q1