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Why does the short-run aggregate supply curve shift to the left in the long run, following...

Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices.

B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices.

C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices.

D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

An explanation will be of help.

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Answer #1

ans ) C ) Workers and firms adjust their expectation of wages and prices upward and they push for higher wages and prices

Explanation: If there is unexpected rise in oil prices short run aggregate supply curve will shift to left.If price level is higher than their expected level to be then workers and firms adjust their expectations ,then they are offered higher wages.In short run the graph of the supply curve is sloping upwards. The price increases with rise in quantity supplied which causes increase in GDP.

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