A rise in price expectations that causes wages to rise causes the short run aggregate supply curve to shift to the left.

Name: A rise in price expectations that causes wages to rise causes the short run aggregate supply curve to shift to the left.
Brand: Quizplus
Rating: 4.8 (40 reviews)

Question

Quizplus · Accepted Answer

When price expectations rise and wages increase, firms' costs increase, which leads to a decrease in short-run aggregate supply due to higher production costs. Therefore, the short run aggregate supply curve shifts to the left.

A Rise in Price Expectations That Causes Wages to Rise