The short-run aggregate supply curve shifts to the left when nominal wages rise in response to
price level increases.

Question

Quizplus · Accepted Answer

When nominal wages rise in response to price level increases, it leads to an increase in production costs for firms. As a result, the short-run aggregate supply curve shifts to the left, indicating a decrease in the quantity of goods and services supplied at a given price level.

The Short-Run Aggregate Supply Curve Shifts to the Left When