Which of the following will most likely increase long-run aggregate supply?
A) an increase in the rate of investment
B) an increase in resource prices
C) an increase in the minimum wage
D) an increase in the expected inflation rate

Question

Quizplus · Accepted Answer

An increase in the rate of investment will lead to an increase in capital stock, which in turn will increase productivity and technological progress, ultimately leading to an increase in long-run aggregate supply. The other choices (B, C, D) are likely to decrease long-run aggregate supply either through increased costs of production, decreased incentives for firms to invest, or decreased economic stability.

Which of the Following Will Most Likely Increase Long-Run Aggregate