The economy's AS curve will shift upward in the short run if there is
A)an increase in the price level.
B)an increase in the wage rate.
C)a decrease in the cost of capital.
D)an improvement in technology.
E)an increase in labour productivity.

Question

Quizplus · Accepted Answer

An increase in the wage rate will increase firms' production costs, causing a decrease in short-run aggregate supply and shifting the AS curve upward. The other choices would shift the curve downward, except for an improvement in technology, which would shift the curve outward (increasing potential output) but not necessarily upward.

The Economy's AS Curve Will Shift Upward in the Short