A rise in wage rates
A) causes the AD curve to shift leftward.
B) causes the short-run aggregate supply (SRAS)curve to shift rightward.
C) does not affect the present position of the SRAS curve.
D) causes the AD curve to shift rightward.
E) causes the SRAS curve to shift leftward.

Question

Quizplus · Accepted Answer

A rise in wage rates increases the cost of production for businesses. This typically leads to a decrease in the quantity of goods and services supplied at any given price level, causing the short-run aggregate supply (SRAS) curve to shift leftward.

A Rise in Wage Rates