Which of the following will not cause an increase in aggregate output (Y)in the long run?
A)an increase in N
B)an increase in K
C)an increase in technology
D)a reduction in the saving rate
E) none of the above

Question

Quizplus · Accepted Answer

A reduction in the saving rate will lead to a decrease in investment, which will eventually lead to a decrease in K (capital stock) in the long run, resulting in a decrease in aggregate output (Y). Hence, option D will not cause an increase in aggregate output (Y) in the long run. On the other hand, options A, B, and C are all factors that can cause an increase in aggregate output (Y) in the long run by increasing the factors of production, such as labor, capital, and technology, respectively.

Which of the Following Will Not Cause an Increase in Aggregate