Which factor will shift the short-run aggregate supply curve to the RIGHT?
A) a widespread decrease in commodity prices
B) an increase in nominal wages
C) a decrease in productivity
D) a decrease in government purchases of goods and services

Question

Quizplus · Accepted Answer

A widespread decrease in commodity prices will reduce the cost of production for firms, which will lead to an increase in their willingness to supply output in the market. This will shift the short-run aggregate supply curve to the right. Choice B, an increase in nominal wages, and choice C, a decrease in productivity, will both increase firms' costs of production and reduce their willingness to supply output, leading to a leftward shift of the short-run aggregate supply curve. Choice D, a decrease in government purchases of goods and services, will reduce the demand for output and may cause firms to reduce production, also leading to a leftward shift of the short-run aggregate supply curve.

Which Factor Will Shift the Short-Run Aggregate Supply Curve to the RIGHT