Which of the following shifts the short-run aggregate supply to the left?
A) an increase in the price level
B) an increase in the expected price level
C) an increase in the capital stock
D) an increase in the money supply

Question

Quizplus · Accepted Answer

An increase in the expected price level would lead to suppliers raising prices in anticipation of higher costs. As a result, firms' production costs increase, resulting in a decrease in short-run aggregate supply, shifting it to the left.

Which of the Following Shifts the Short-Run Aggregate Supply to the Left