Assume the economy is initially operating at the natural level of output. Which of the following events will initially cause a shift of the aggregate supply curve?
A) An increase in the price target.
B) A decrease in the money supply.
C) An increase in the minimum wage.
D) An increase in government spending.
E) An increase in taxes.

Question

Quizplus · Accepted Answer

An increase in the minimum wage will increase the costs of production for firms, causing a shift to the left in the aggregate supply curve. None of the other events listed would cause an initial shift in the aggregate supply curve.

Assume the Economy Is Initially Operating at the Natural Level