Increases in government regulations can make the production of goods and services more costly for producers, and the increase in production costs results in a leftward shift of both the short-run and the long-run aggregate supply curves.

Question

Quizplus · Accepted Answer

This statement is true, as increased government regulations can lead to higher production costs for producers, such as through compliance costs for meeting new regulations or the need to invest in new equipment or technology. This increase in costs results in a leftward shift of both the short-run and long-run aggregate supply curves, as producers are less willing and able to supply goods and services at any given price level.

Increases in Government Regulations Can Make the Production of Goods