A leftward shift in the aggregate supply curve produces
A) demand-side inflation.
B) increases in real output.
C) supply-side inflation.
D) a higher standard of living.
E) a horizontal Phillips curve.

Question

Quizplus · Accepted Answer

A leftward shift in the aggregate supply curve indicates a decrease in the total supply of goods and services at every price level, leading to higher prices for those goods and services. This scenario is known as supply-side inflation, where the inflation is driven by a reduction in supply rather than an increase in demand.

A Leftward Shift in the Aggregate Supply Curve Produces