-In the above figure, the short-run aggregate supply curve is SAS1. If the money wage rate increases, there is
A) an upward movement along SAS1.
B) a downward movement along SAS1.
C) a shift to SAS0.
D) a shift to SAS2.

Question

-In the above figure, the short-run aggregate supply curve is SAS1. If the money wage rate increases, there is
A) an upward movement along SAS1. 
B) a downward movement along SAS1. 
C) a shift to SAS0. 
D) a shift to SAS2.

Quizplus · Accepted Answer

An increase in the money wage rate will shift the short-run aggregate supply curve to the left, from SAS1 to SAS0. This is because firms will find it more expensive to produce goods and services, and will therefore reduce their output.

-In the Above Figure, the Short-Run Aggregate Supply Curve Is