The aggregate supply curve shifts rightward when
A) the money wage rate falls.
B) government purchases increase.
C) potential GDP decreases.
D) the money wage rate rises.
E) income taxes increase.

Question

Quizplus · Accepted Answer

A rightward shift in the aggregate supply curve can occur due to a decrease in the cost of production, such as when the money wage rate falls. This makes it cheaper for firms to produce goods and services, leading to an increase in aggregate supply.

The Aggregate Supply Curve Shifts Rightward When