If unions are unable to negotiate a large wage increase, then AS would shift to the left in the short run.

Question

Quizplus · Accepted Answer

The Aggregate Supply (AS) curve represents the total quantity of goods and services that firms are willing and able to produce at different price levels. A union's inability to negotiate a large wage increase would not directly cause the AS curve to shift to the left. Instead, it might prevent a shift to the left that could occur if wages were significantly increased, as higher wages can increase production costs for firms, potentially reducing the quantity of goods and services they are willing to supply at any given price level.

If Unions Are Unable to Negotiate a Large Wage Increase