When production costs rise,
A)the short-run aggregate supply curve shifts to the right.
B)the short-run aggregate supply curve shifts to the left.
C)the aggregate demand curve shifts to the right.
D)the aggregate demand curve shifts to the left.

Question

Quizplus · Accepted Answer

When production costs rise, the short-run aggregate supply curve shifts to the left because it becomes more expensive for firms to produce goods and services, resulting in a decrease in the quantity that they are willing to supply at any given price level.

When Production Costs Rise