If the aggregate supply curve shifts leftward,
A)the price level increases and output increases
B)the resulting increase in the price level is usually called cost-push inflation
C)the resulting increase in the price level is usually called demand-pull inflation
D)the price level increases only if there is also a rightward shift of the aggregate demand curve
E)the price level decreases and output increases

Question

Quizplus · Accepted Answer

When the aggregate supply curve shifts leftward, the resulting increase in the price level is usually called cost-push inflation. This happens because the cost of production increases, leading to a decrease in output and an increase in prices. There is no guarantee that output will increase in this scenario.

If the Aggregate Supply Curve Shifts Leftward