An increase in production costs will shift the:
A)aggregate demand curve.
B)short-run aggregate supply curve.
C)long-run aggregate supply curve.
D)none of the above.

Question

Quizplus · Accepted Answer

An increase in production costs will cause a decrease in short-run aggregate supply as it becomes more expensive for firms to produce goods and services. This will result in a leftward shift of the short-run aggregate supply curve. It will not affect the aggregate demand curve or the long-run aggregate supply curve, as they are determined by factors such as consumer spending, investment, and technology in the long run, and overall demand in the economy.

An Increase in Production Costs Will Shift The