More favourable aggregate supply conditions can cause:
A) a depression.
B) a recession.
C) real GDP and employment to rise.
D) unemployment to rise.

Question

Quizplus · Accepted Answer

Favorable aggregate supply conditions, such as increases in productivity or decreases in input prices, can lead to an increase in the economy's potential output, causing real GDP to rise. This increase in production typically results in higher employment levels, as more workers are needed to increase output. Therefore, options A and D are not correct as they both suggest negative outcomes, while option B is not correct as a recession typically occurs when there is a decrease in aggregate demand, not supply.

More Favourable Aggregate Supply Conditions Can Cause