If the price level remains constant but the wage rate increases,then there will be __________ in production and the SRAS curve will shift __________.
A) an increase; rightward
B) a decrease; rightward
C) an increase; leftward
D) a decrease; leftward

Question

Quizplus · Accepted Answer

When the wage rate increases while the price level remains constant, the cost of production for businesses increases. This typically leads to a decrease in production because it becomes more expensive to produce goods and services. Consequently, the short-run aggregate supply (SRAS) curve shifts leftward, indicating a reduction in the total quantity of goods and services that firms are willing to supply at each price level.

If the Price Level Remains Constant but the Wage Rate