An increase in the money wage rate shifts the SAS curve ________ and an increase in the money prices of raw materials shifts the SAS curve ________.
A) rightward; rightward
B) leftward; leftward
C) rightward; leftward
D) leftward; rightward

Question

Quizplus · Accepted Answer

An increase in the money wage rate or the money prices of raw materials increases production costs, leading to a decrease in the quantity of goods and services that businesses are willing to supply at any given price level. This results in the short-run aggregate supply (SAS) curve shifting leftward in both cases.

An Increase in the Money Wage Rate Shifts the SAS