Which of the following could cause the economy's AS curve to shift upward in the short run?
A)an improvement in technology
B)a decrease in the cost of capital
C)an increase in the price level
D)a decrease in nominal wages
E)an increase in nominal wages

Question

Quizplus · Accepted Answer

An increase in nominal wages would lead to higher production costs for firms, causing them to decrease their supply of goods and services at any given price level. This would shift the aggregate supply curve upward in the short run. A shift in the AS curve caused by an increase in the price level (C) would be a movement along the curve rather than a shift. An improvement in technology (A) or a decrease in the cost of capital (B) would shift the AS curve downward, while a decrease in nominal wages (D) would shift it upward.

Which of the Following Could Cause the Economy's AS Curve