A decline in short-run aggregate supply would be caused by which of the following?
A) The discovery of new mineral deposits in Arizona
B) Higher real wage rates
C) Lower personal income in France
D) Cutbacks in government spending
E) Rapid depreciation of the Swiss franc

Question

Quizplus · Accepted Answer

Higher real wage rates lead to an increase in production costs, causing a decrease in short-run aggregate supply. The other options are either unrelated or would lead to an increase in short-run aggregate supply.

A Decline in Short-Run Aggregate Supply Would Be Caused by Which