Aggregate supply increases when:
A) wage rates decrease, while the economy's price level remains unchanged.
B) resource availability is reduced.
C) there are fewer workers.
D) there is less capital and the price level remains unchanged.

Question

Quizplus · Accepted Answer

According to the AS-AD model, a decrease in wage rates would shift the short-run aggregate supply (SRAS) curve to the right, indicating an increase in the quantity of goods and services that firms are willing and able to supply at each price level. This would lead to an increase in the aggregate supply of the economy.

Aggregate Supply Increases When