Which factor will increase short-run aggregate supply?
A) a law that requires health insurance for all employees
B) an increase in the aggregate price level
C) a large decrease in the price of oil
D) an increase in the minimum wage

Question

Quizplus · Accepted Answer

A large decrease in the price of oil would lower production costs for firms, leading to an increase in short-run aggregate supply.

Note: A, B, and D would not increase short-run aggregate supply. A law requiring health insurance would increase costs for firms and potentially decrease supply. An increase in the aggregate price level implies higher prices for inputs, which would also increase costs and decrease supply. An increase in the minimum wage would raise labor costs for firms, leading to lower supply.

Which Factor Will Increase Short-Run Aggregate Supply