A simultaneous rise in productivity and nominal wages would shift the short-run aggregate supply curve to the:
A) right if the rise in nominal wages is larger than the rise in productivity.
B) right if the cost per unit of output rises.
C) left if the cost per unit of output falls.
D) left if the rise in nominal wages is larger than the rise in productivity.

Question

Quizplus · Accepted Answer

If the rise in nominal wages is larger than the rise in productivity, the cost per unit of output increases, leading to a leftward shift in the short-run aggregate supply curve.

A Simultaneous Rise in Productivity and Nominal Wages Would Shift