Which of the following events will increase long-run aggregate supply?
A) a decrease in expected profit
B) an advance in technology
C) an increase in the interest rate
D) an increase in resource prices

Question

Quizplus · Accepted Answer

An advance in technology will increase productivity and efficiency, leading to an increase in long-run aggregate supply. A decrease in expected profit (choice A) will likely lead to a decrease in investment and production, causing a decrease in aggregate supply. An increase in the interest rate (choice C) may lead to a decrease in investment, which could decrease aggregate supply in the short run, but would not affect long-run aggregate supply. An increase in resource prices (choice D) would likely lead to a decrease in production and could decrease long-run aggregate supply.

Which of the Following Events Will Increase Long-Run Aggregate Supply