Leftward shifts in long-run aggregate supply
A)can cause inflation if aggregate demand is also not declining.
B)are a result of the multiplier effect.
C)are the reason for growth in real GDP.
D)include changes in the governments' tax structure.

Question

Quizplus · Accepted Answer

Leftward shifts in long-run aggregate supply occur when factors of production become less productive or more costly, which decreases the supply of goods and services. This can cause inflation if aggregate demand remains constant or increases, as there are fewer goods and services available at higher prices. The other options are not accurate descriptions of leftward shifts in long-run aggregate supply.

Leftward Shifts in Long-Run Aggregate Supply