Question

A simultaneous rise in productivity and nominal wages would shift the short-run aggregate supply curve to the: right if the cost per unit of output rises. left if the rise in nominal wages is larger than the rise in productivity. left if the cost per unit of output falls. right if the rise in nominal wages is larger than the rise in productivity.

Answer 1

Answer:

left if the rise in nominal wages is larger than the rise in productivity

Explanation:

Aggregate supply curve shows all goods and services that is supplied to consumers during a particular period in a particular country.

Movement along aggregate demand curve is as a result of price, however a shift in the curve results from othe factors such as income, taxes, cost of input, and so on.

Increased wages will lead to reduction in aggregate supply because the cost of input (labour) has increased. So supplies will be able to produce less at the higher cost.

A rise in productivity will result in increase in output per unit time. So more will be produced.

If the rise in wages is higher than those in productivity it will result in a shift to the left. That is products will be supplied at less quantity than before. This is as a result of more cost on the supplier.