The shift of the aggregate supply curve to the left because of adverse supply shocks typically results in which of the following?

Question

Multiple select question.

Recession

Deflation

Cost-push inflation

Demand-pull inflation

Answer 1

The shift of the aggregate supply curve to the left because of adverse supply shocks typically results in the following:

• Recession: A leftward shift of the aggregate supply curve can lead to higher prices and lower output, which can contribute to a recession.

• Cost-push inflation: Adverse supply shocks increase production costs, leading to higher prices for goods and services, which is characteristic of cost-push inflation.

So the correct selections would be Recession and Cost-push inflation.

"Deflation" and "Demand-pull inflation" are not typically associated with a leftward shift of the aggregate supply curve due to adverse supply shocks.