________ decreases aggregate supply.
A)An increase in potential GDP
B)An increase the quantity of capital
C)A rise in the price level
D)A rise in the money wage rate
E)A fall in the money wage rate

Question

Quizplus · Accepted Answer

A rise in the money wage rate means that firms have to pay higher wages to their workers, which increases their production costs. As a result, firms are willing to supply fewer goods and services at a given price level, leading to a decrease in aggregate supply.

________ Decreases Aggregate Supply