Short-run Phillips curve is upward sloping because:

A leftward shift in aggregate demand (AD) would imply a decrease in overall demand for goods and services in the economy, which is not directly related to an increase in expected inflation. Instead, higher inflation expectations typically do not decrease demand but can instead shift supply dynamics, hence this option is incorrect.

The Phillips curve illustrates the inverse relationship between inflation and unemployment. A leftward shift in the Phillips curve would suggest that for any given level of unemployment, inflation is expected to be higher, but it does not directly relate to shifts in aggregate supply. Thus, this choice does not explain the effect of increased inflation expectations on supply.

An increase in expected inflation usually leads to higher nominal interest rates, as lenders demand a premium for the expected decline in purchasing power. Therefore, this choice is incorrect, as it contradicts the relationship between inflation expectations and nominal interest rates.