Use the figure below to answer the following questions.

Figure 28.1.2
-Refer to Figure 28.1.2.Consider the market for labour as the short-run aggregate supply curve shifts leftward from SAS? to SAS?.This shift could have been the result of an agreement between workers and employers for a

Question

Use the figure below to answer the following questions.
  
Figure 28.1.2
-Refer to Figure 28.1.2.Consider the market for labour as the short-run aggregate supply curve shifts leftward from SAS? to SAS?.This shift could have been the result of an agreement between workers and employers for a

Quizplus · Accepted Answer

When the short-run aggregate supply curve shifts leftward, it means that the cost of production has increased, hence firms are willing to produce less output at every price level. A leftward shift of the SAS curve could be the result of an increase in the money wage rate, which increases the cost of labour to firms. Thus, an agreement between workers and employers for a 15 percent increase in the money wage rate would have caused the leftward shift of the SAS curve. Therefore, the correct choice is D.

Use the Figure Below to Answer the Following Questions