If workers demand and receive higher real wages, the cost of production ________ and the short-run aggregate supply curve shifts ________.
A) rises; leftward
B) rises; rightward
C) falls; leftward
D) falls; rightward

Question

Quizplus · Accepted Answer

If workers demand and receive higher real wages, the cost of production rises as firms have to pay more for their labor. This increase in production costs causes a leftward shift of the short-run aggregate supply (SRAS) curve, reducing the amount of output firms are willing to produce at any given price level.

If Workers Demand and Receive Higher Real Wages, the Cost