Which of the following will cause an increase in both aggregate supply and long-run aggregate supply?
A)An increase in factor prices.
B)A decrease in factor prices.
C)A decrease in the labour participation rate.
D)An increase in productivity.

Question

Quizplus · Accepted Answer

An increase in productivity will cause an increase in both aggregate supply and long-run aggregate supply as output can be produced with fewer resources, leading to a decrease in production costs and an increase in overall output available in the economy. Factors affecting factor prices (A, B) and the labour participation rate (C) will have varying impacts on aggregate supply and long-run aggregate supply depending on the specific circumstances.

Which of the Following Will Cause an Increase in Both