Which of the following will increase the short-run aggregate supply?

Question

Quizplus · Accepted Answer

A decrease in the price of capital will increase the short-run aggregate supply by lowering the cost of production for firms. Option A is incorrect because an increase in wages will increase the cost of production for firms, thereby decreasing short-run aggregate supply. Option C may increase long-run aggregate supply, but is not directly related to short-run aggregate supply. Option D is incorrect because an increase in consumption spending may increase demand for goods and services, but it does not directly impact the ability of firms to produce in the short run.

Which of the Following Will Increase the Short-Run Aggregate Supply