Decrease in Aggregate Supply

Employment: Refers to the number of people who are currently working or actively seeking work. When there is a decrease in aggregate supply, it often leads to reduced employment opportunities as businesses produce fewer goods and services.

Inflation: Refers to the general increase in prices over time. A decrease in aggregate supply can contribute to inflationary pressures because when there is less production, demand may outpace supply leading to higher prices.

Unemployment Trade-off: Describes the relationship between inflation and unemployment. When there is a decrease in aggregate supply, it can lead to higher unemployment rates as businesses cut back on production and lay off workers. This trade-off highlights how changes in aggregate supply impact both inflation and unemployment levels.