An increase in regulation will shift the aggregate:
A) demand curve leftward.
B) supply curve rightward.
C) supply curve leftward.
D) demand curve rightward.

Question

Quizplus · Accepted Answer

An increase in regulation typically entails higher costs for businesses, which decreases their willingness and ability to produce goods and services. This, in turn, shifts the supply curve leftward, meaning that firms will be willing to supply less at any given price level. The demand curve is unaffected by the imposition of regulations.

An Increase in Regulation Will Shift the Aggregate