Other factors held constant, a decrease in labour cost will shift the aggregate:
A) demand curve leftward.
B) demand curve rightward.
C) supply curve leftward.
D) supply curve rightward.

Question

Quizplus · Accepted Answer

A decrease in labour costs will lead to a decrease in production costs, which will increase the profitability of producing goods and services. This will cause firms to supply more output at each price level, leading to a rightward shift in the aggregate supply curve.

Other Factors Held Constant, a Decrease in Labour Cost Will