The short-run aggregate supply curve would NOT shift to the left as a result of a(n):
A) decrease in productivity.
B) increase in nominal wages.
C) increase in interest rates.
D) increase in the price of commodities used for production.

Question

Quizplus · Accepted Answer

An increase in interest rates would affect the demand for goods and services, and not directly impact the production capabilities of firms in the short run. A decrease in productivity (A), an increase in nominal wages (B), and an increase in the price of commodities used for production (D) would increase firms' costs and decrease their willingness to produce at any given price level, shifting the short-run aggregate supply curve to the left.

The Short-Run Aggregate Supply Curve Would NOT Shift to the Left