The short-run aggregate supply curve will shift to the left when:
A) Phillips curve expectations rise.
B) Phillips curve expectations fall.
C) inflation expectations rise.
D) inflation expectations fall.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve will shift to the left when inflation expectations rise because producers anticipate higher costs in the future, leading them to reduce the quantity of goods and services they are willing to supply at current prices.

The Short-Run Aggregate Supply Curve Will Shift to the Left