Question

The Short Run Aggregate Supply Curve can shift either Left or Right. Which of the following would shift the SRAS curve to the left?

A. Decrease in Taxation
B. Increase in Government Subsidy
c. Increase in costs of Labor

Answer 1

C.

Increase in the costs of labor will increase the costs of production, and in an attempt to lower costs, firms may reduce output and therefore the SRAS will decrease and shift to the left.