An increase in the price of nonlabor inputs
A) shifts the AD curve leftward.
B) shifts the SRAS curve leftward.
C) is the same thing as a beneficial supply shock.
D) shifts the AD curve rightward.
E) shifts the SRAS curve rightward.

Question

Quizplus · Accepted Answer

An increase in the price of nonlabor inputs reduces the profitability of firms, leading to a decrease in supply and a leftward shift of the short-run aggregate supply (SRAS) curve. This results in higher prices and lower output levels in the short run.

An Increase in the Price of Nonlabor Inputs