The aggregate supply curve will shift
A) rightward if potential GDP decreases.
B) rightward if the money wage rate falls.
C) rightward if the money wage rate rises.
D) leftward if potential GDP increases.
E) leftward if the aggregate demand curve shifts leftward.

Question

Quizplus · Accepted Answer

According to the classical model, a decrease in the money wage rate will lead to a decrease in production costs for firms, resulting in an increase in aggregate supply. Thus, the aggregate supply curve will shift rightward.

The Aggregate Supply Curve Will Shift