Which of the following will cause an increase in aggregate supply?
A) an increase in aggregate demand
B) an increase in the price level
C) an increase in marginal tax rates
D) a decrease in input prices

Question

Quizplus · Accepted Answer

A decrease in input prices will cause a decrease in production costs, leading to an increase in aggregate supply. Option A is incorrect as an increase in aggregate demand will lead to an increase in prices, causing a decrease in aggregate supply. Option B is incorrect as an increase in the price level will lead to a decrease in aggregate supply. Option C is incorrect as an increase in marginal tax rates will lead to a decrease in aggregate supply due to a decrease in investments and incentives for businesses to expand.

Which of the Following Will Cause an Increase in Aggregate