When production costs rise, in the short run:
A)the aggregate-supply curve shifts down to the right
B)the aggregate-demand curve shifts down to the left
C)the aggregate-demand curve shifts up to the right
D)the aggregate-supply curve shifts up to the left
E)both the aggregate-demand curve and the aggregate-supply curve shift to the left

Question

Quizplus · Accepted Answer

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

When Production Costs Rise, in the Short Run