Which of the following shifts the aggregate supply curve leftward?
A) A fall in the money wage rate.
B) A decrease in the price level.
C) An increase in potential GDP.
D) A fall in the real wage rate.
E) A decrease in potential GDP.

Question

Quizplus · Accepted Answer

A decrease in potential GDP shifts the aggregate supply curve leftward because it reflects a reduction in the economy's capacity to produce goods and services, typically due to factors like lower investment in capital or a decrease in the labor force.

Which of the Following Shifts the Aggregate Supply Curve Leftward