If nominal wages fall, then the short-run aggregate _____ curve shifts to the _____.
A) supply; right
B) supply; left
C) demand; right
D) demand; left

Question

Quizplus · Accepted Answer

When nominal wages fall, the cost of production decreases for businesses. This makes it cheaper for them to produce goods and services, leading to an increase in the quantity supplied at every price level. Therefore, the short-run aggregate supply curve shifts to the right.

If Nominal Wages Fall, Then the Short-Run Aggregate _____ Curve