Which of the following causes a leftward shift in the short-run aggregate supply curve?
A) an increase of goods prices while nominal incomes are unchanged
B) an increase in nominal incomes (wages and salaries)
C) an increase of full-employment real GDP
D) an increase of personal consumption expenditures while the price level is unchanged

Question

Quizplus · Accepted Answer

An increase in nominal incomes (wages and salaries) raises the cost of production for businesses, which typically reduces the quantity of goods and services supplied at any given price level, thus shifting the short-run aggregate supply curve to the left.

Which of the Following Causes a Leftward Shift in the Short-Run