An increase in the federal minimum wage would shift the long-run aggregate supply curve inward (to the left).

Question

Quizplus · Accepted Answer

Increasing the minimum wage increases production costs for businesses, which would lead to a decrease in the profitability of firms and a reduction in their output. This reduction in output and productivity would shift the long-run aggregate supply curve inward, resulting in higher prices and lower real GDP.

An Increase in the Federal Minimum Wage Would Shift the Long-Run