The short-run aggregate supply curve will shift leftward when
A)consumption spending, investment spending, government purchases, or net exports decrease.
B)price expectations are revised upward.
C)actual prices in the economy as a whole increase.
D)the economy's natural output level falls.

Question

Quizplus · Accepted Answer

When price expectations are revised upward, workers and firms anticipate higher costs, leading to higher wages and production costs, which causes the short-run aggregate supply curve to shift leftward.

The Short-Run Aggregate Supply Curve Will Shift Leftward When