An increase in inflation immediately causes a downward shift of the short-run aggregate supply curve.

Name: An increase in inflation immediately causes a downward shift of the short-run aggregate supply curve.
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Question

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An increase in inflation has no direct impact on the short-run aggregate supply curve. Instead, it affects the aggregate demand curve and can cause a movement along the short-run aggregate supply curve due to changes in production costs.

An Increase in Inflation Immediately Causes a Downward Shift of the Short-Run