How does a significant increase in production costs affect the Aggregate Supply Curve and what impact does this have on the Aggregate Demand Curve, particularly in the context of cost-push inflation?

When production costs increase significantly, it becomes more expensive for businesses to produce goods and services. This situation causes the Aggregate Supply Curve to shift to the left, meaning that at every price level, less is supplied. For example, if the cost of raw materials rises sharply, manufacturers may produce fewer products because they can't afford to make as many. As the supply decreases, prices generally rise, leading to cost-push inflation, where higher costs push up the overall price level. Although the Aggregate Demand Curve itself doesn't shift directly due to the increase in production costs, the higher prices can reduce consumers' purchasing power, which may lead to a decrease in demand over time.