Question

The short-run aggregate supply curve would shift to the left for all the following reasons EXCEPT: a decrease in productivity. an increase in nominal wages. an increase in interest rates. an increase in the price of commodities used for production.

Answer 1

Answer:

Answer is option C, i.e. An increase in interest rates.

Explanation:

The SRAS curve is the graphical representation showing the relation between the production and price of a commodity in the aggregated market scenario.

The curve would shift to the left in the following situations:

• When there is a decrease in productivity.
• When there is an increase in the nominal wages of the labor.
• When there is an increase in the price of the commodities or raw materials that are used for production.

The interest rate change does not affect the shift of the SRAS curve, and therefore, the answer is option C.