Which of the following will decrease the short-run aggregate supply?
A) An increase in wages
B) An increase in the labor force
C) A decrease in net exports
D) A decrease in the personal income tax rates

Question

Quizplus · Accepted Answer

An increase in wages would increase the production costs for firms, leading to a decrease in short-run aggregate supply. An increase in the labor force (B) would increase the potential output of goods and services, leading to an increase in short-run aggregate supply. A decrease in net exports (C) would decrease the demand for goods and services, leading to a decrease in short-run aggregate supply. A decrease in personal income tax rates (D) would increase disposable income and consumer spending, leading to an increase in aggregate demand and potentially an increase in short-run aggregate supply.

Which of the Following Will Decrease the Short-Run Aggregate Supply