If workers begin to expect more inflation in the future, then we would expect that the:
A)short-run aggregate supply curve will shift up (to the left).
B)short-run aggregate supply curve will shift down (to the right).
C)short-run aggregate supply curve will not shift.
D)aggregate demand curve will shift left.

Question

Quizplus · Accepted Answer

When workers expect more inflation in the future, they will likely demand higher wages to compensate for the anticipated increase in prices. This increase in production costs for businesses can lead to a decrease in the quantity of goods and services supplied at any given price level, effectively shifting the short-run aggregate supply curve to the left (or up).

If Workers Begin to Expect More Inflation in the Future