The short-run aggregate supply curve will shift to the right if:
A) commodity prices rise.
B) nominal wages rise.
C) productivity decreases.
D) nominal wages fall.

Question

Quizplus · Accepted Answer

When nominal wages fall, the cost of production decreases, allowing firms to produce and sell more output at each price level. This leads to an increase in short-run aggregate supply, shifting the curve to the right.

The Short-Run Aggregate Supply Curve Will Shift to the Right