An increase in long- run aggregate supply could be caused by
A)greater regulatory impediments to business.
B)oil embargo in another country.
C)increased competition.
D)an increase in taxes.

Question

Quizplus · Accepted Answer

Increased competition can lead to improvements in technology and increases in productivity, which can cause an increase in the long-run aggregate supply. The other options are likely to decrease the long-run aggregate supply. Greater regulatory impediments to business can increase costs and reduce productivity, an oil embargo in another country can cause a decline in the availability of oil and increase its price, and an increase in taxes can reduce incentives to work and invest, and lead to a reduction in productivity.

An Increase in Long- Run Aggregate Supply Could Be Caused