A shift to the right of the short-run aggregate supply curve may be caused by a(n):
A) decrease in productivity.
B) increase in productivity.
C) increase in the price of inputs.
D) increase in wages.

Question

Quizplus · Accepted Answer

An increase in productivity shifts the short-run aggregate supply curve to the right because firms are able to produce more output with the same amount of inputs, leading to a lower cost of production and a higher level of output at any given price level. Decrease in productivity (A), increase in the price of inputs (C), and increase in wages (D) would shift the short-run aggregate supply curve to the left.

A Shift to the Right of the Short-Run Aggregate Supply