The passage of new legislation requiring more extensive government regulation of business will most likely:
A)increase aggregate demand.
B)increase aggregate supply.
C)decrease aggregate demand.
D)decrease aggregate supply.

Question

Quizplus · Accepted Answer

The passage of new legislation requiring more extensive government regulation of business will increase the cost of production for businesses, which will lead to a decrease in aggregate supply. This is because businesses will have to spend more to comply with the new regulations and this added cost will likely result in them producing fewer goods and services.

The Passage of New Legislation Requiring More Extensive Government Regulation