Which change would most directly shift the short-run aggregate supply curve to the left?
Correct answer: B. An increase in expected future inflation
- A. A fall in the price of imported raw materials
- B. An increase in expected future inflation
- C. A reduction in personal income tax rates
- D. An increase in household financial wealth
Explanation
Higher expected inflation can lead workers and firms to seek higher wages and prices, raising production costs in the short run. This shifts short-run aggregate supply left, while cheaper inputs would generally shift it right.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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