Which of the following events will lead to an inward shift of the aggregate supply curve?

Question

Quizplus · Accepted Answer

An increase in wage rates will increase production costs for firms, reducing their profitability, and leading to a decrease in aggregate supply, thus leading to an inward shift of the aggregate supply curve. Choices A and B would lead to an outward shift of the aggregate supply curve as producers are incentivized to produce more due to higher prices and increased demand. Choice C will also lead to an outward shift of the aggregate supply curve as increased productivity results in more output being produced at every price level.

Which of the Following Events Will Lead to an Inward