Which of the following will cause an increase in aggregate supply?
A)An increase in government spending.
B)An increase in exchange rates.
C)An increase in the labour force participation rate.
D)An increase in factor prices.

Question

Quizplus · Accepted Answer

An increase in the labor force participation rate will increase the number of workers available, which will in turn increase the aggregate supply of goods and services. Choices A and D would decrease aggregate supply, as increased government spending would increase demand but not supply, and increased factor prices would increase costs for producers and decrease their willingness to supply goods and services. The effect of exchange rates on aggregate supply is ambiguous and depends on the specific circumstances.

Which of the Following Will Cause an Increase in Aggregate