An increase in real wages shifts the aggregate supply curve to the left, always resulting in cost-push inflation.

Question

Quizplus · Accepted Answer

An increase in real wages may cause a shift in the aggregate supply curve to the left, but it does not necessarily always result in cost-push inflation. Other factors such as productivity, technology, and input prices can affect the location of the aggregate supply curve and the magnitude of inflation.

An Increase in Real Wages Shifts the Aggregate Supply Curve