Final answer:
Workers expecting inflation to rise typically seek higher wages, which increases firms' costs and reduces output at any given price level. The short-run aggregate supply curve will thus shift to the left (option B).
Step-by-step explanation:
If workers expect inflation to rise from 3% to 5% next year, it indicates that they anticipate a rise in the general price level, which includes the prices for labor (wages). When workers expect a rise in inflation, they often seek higher wages to maintain their purchasing power. This increase in wages will cause firms' production costs to rise. Consequently, firms will typically produce less at any given price level, causing the short-run aggregate supply (SRAS) curve to shift to the left. Therefore, the correct answer is B) shift the short-run aggregate supply curve to the left.
It is important to understand that this shift in the SRAS curve represents a scenario where the same amount of goods and services will be offered at higher prices due to increased costs of production. This alignment with Keynesian macroeconomics illustrates the text's description that when wages rise, often due to high demand for labor in a situation of full employment, it leads to a leftward shift in the SRAS, resulting in higher price levels without an increase in real GDP.