What occurs when wages and other resource costs increase due to an increase in aggregate demand?

When aggregate demand increases, it typically leads to higher demand for goods and services, which can drive up wages and other resource costs. As businesses experience higher demand, they may need to hire more workers or pay existing ones more to meet the increased demand for their products. This rise in wages and costs can lead to upward pressure on prices, contributing to inflationary pressures in the economy.

As a result, the short-run aggregate supply curve shifts to the left. This shift occurs because higher production costs make it less profitable for some businesses to produce at previous levels, leading to a reduction in the quantity of goods and services supplied at any given price level. Therefore, the correct answer reflects the dynamic interactions between aggregate demand and aggregate supply and the consequent implications for the economy when resource costs rise.

The other options do not directly relate to the immediate outcome of increased resource costs following a rise in aggregate demand. Increased employment opportunities and long-term economic growth may occur as a general result of a healthy economy, but they do not specifically address the consequences of rising resource costs. Decreased consumer spending might occur in some instances, but the focus on cost increases primarily indicates a shift in the short-run aggregate supply curve as producers adjust to changing costs.