Which of the following will lead to a leftward shift in the U.S.SRAS curve?

Question

Quizplus · Accepted Answer

A leftward shift in the U.S. SRAS curve means a decrease in aggregate supply, or a decrease in the ability of firms to produce and supply goods and services at any given price level. A depreciation of the dollar would lead to an increase in the prices of imported goods and services, which in turn would increase the costs of production for firms that use imported inputs. This would decrease their profitability and ability to produce, which would shift the SRAS curve to the left. A decrease in foreign input prices (choice A) would have the opposite effect by decreasing the costs of production for firms that use imported inputs, which would increase their profitability and ability to produce, shifting the SRAS curve to the right. An appreciation of the dollar (choice B) would also decrease the prices of imported goods and services, but this would have a different effect on the economy overall and would not necessarily lead to a leftward shift in the SRAS curve. Therefore, choices A and B are incorrect, and the correct answer is C.

Which of the Following Will Lead to a Leftward Shift