In the short run,________.
A)cost push shocks can cause firms to raise prices
B)workers pushing for higher wages may lead to increases in inflation
C)the aggregate supply curve may shift to the left with increases in expected inflation
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

All of the above statements are true for the short run. Cost push shocks such as an increase in input prices can lead to firms raising prices to maintain their profitability. Workers' push for higher wages can also increase production costs and cause inflation. Moreover, if inflation is expected to be higher, firms may increase prices in anticipation of higher costs, causing a leftward shift in the Aggregate Supply curve.

In the Short Run,________