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Assume That an Economy Is Operating Beyond Its Productive Capacity

Question 54

Multiple Choice

Assume that an economy is operating beyond its productive capacity and there is no government intervention.Suppose workers and other resource suppliers negotiate higher resource payments.What will be the effect on the short-run aggregate supply curve?  


A)  The short-run aggregate supply curve will shift leftward. 
B)  A leftward movement will occur along a fixed short-run aggregate supply curve. 
C)  The short-run aggregate supply curve will NOT shift. 
D)  The short-run aggregate supply curve will shift rightward.

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