Everything else held constant,if workers expect an increase in inflation,________ aggregate supply ________.
A)long-run;increases
B)long-run;decreases
C)short-run;decreases
D)short-run;increases

Question

Quizplus · Accepted Answer

When workers expect an increase in inflation, they typically anticipate higher future costs and may push for higher wages to compensate. This can lead to increased production costs for firms in the short run, which can decrease short-run aggregate supply as firms are less willing or able to produce at any given price level.

Everything Else Held Constant,if Workers Expect an Increase in Inflation,________