-In the above figure, the short-run aggregate supply curve is SAS₁. If the money wage rate increases, there is A) an upward movement along SAS₁. B) a downward movement along SAS₁. C) a shift to SAS₀. D) a shift to SAS₂.

Question

Quizplus · Accepted Answer

An increase in the money wage rate will shift the short-run aggregate supply curve to the left, from SAS₁ to SAS₀. This is because firms will find it more expensive to produce goods and services, and will therefore produce less at any given price level.

-In the Above Figure, the Short-Run Aggregate Supply Curve Is