Which of the following increases aggregate supply in the short-run, everything else held constant?
A) An increase in the price of crude oil
B) A successful wage increase led by workers
C) Expectations of a higher inflation rate
D) A technological improvement that increases worker productivity

Question

Quizplus · Accepted Answer

A technological improvement that increases worker productivity will decrease the cost of production, leading to an increase in aggregate supply in the short run. A increase in the price of crude oil (A) and expectations of a higher inflation rate (C) both increase production costs and decrease aggregate supply. A successful wage increase led by workers (B) will increase production costs and may decrease aggregate supply unless accompanied by a corresponding increase in productivity.

Which of the Following Increases Aggregate Supply in the Short-Run