If the amount of regulation in an economy increases,the aggregate supply curve shifts _____ and output supplied will be _____.

Question

Quizplus · Accepted Answer

If the amount of regulation in an economy is increased, it leads to higher costs for firms to produce and supply goods and services. This results in a leftward shift in the aggregate supply curve. Due to the increased costs, firms will reduce their output supplied, leading to a decrease in overall economic activity. Therefore, the correct answer is B, i.e., the aggregate supply curve shifts left, and output supplied will be reduced.

If the Amount of Regulation in an Economy Increases,the Aggregate