Which of the following causes a leftward shift in the short-run aggregate supply curve?
A) An increase of goods prices while nominal incomes are unchanged.
B) An increase in nominal incomes (wages and salaries).
C) An increase of full-employment real GDP.
D) An increase of personal consumption expenditures while the price level is unchanged.
E) An increase of personal consumption expenditures while full-employment real GDP is unchanged.

Question

Quizplus · Accepted Answer

An increase in nominal incomes (wages and salaries) causes a leftward shift in the short-run aggregate supply curve, as it increases the cost of production for firms, leading to a decrease in their profitability and reducing their incentive to produce.

Which of the Following Causes a Leftward Shift in the Short-Run