Which of the following will most likely cause an increase (shift to the right) in both the long-run and short-run aggregate supply curves?
A) an increase in the national debt
B) an increase in income tax rates
C) a decrease in the economy's rate of investment and capital formation
D) a technological improvement in robotics that substantially increases labor productivity

Question

Quizplus · Accepted Answer

A technological improvement in robotics that substantially increases labor productivity will lead to an increase in both the long-run and short-run aggregate supply curves. This is because the technology will allow firms to produce more output with the same amount of inputs, resulting in lower costs of production and increased productivity. An increase in the national debt and an increase in income tax rates are likely to decrease aggregate supply, while a decrease in the economy's rate of investment and capital formation will decrease both short-run and long-run aggregate supply.

Which of the Following Will Most Likely Cause an Increase