An increase in regulation will cause
A)AD to increase (move to the right).
B)AD to decrease (move to the left).
C)AS to increase (move to down and to the right).
D)AS to decrease (move to up and to the left).

Question

Quizplus · Accepted Answer

An increase in regulation leads to higher costs for businesses, which in turn reduces their profitability and ability to produce goods and services. This results in a leftward shift of the AS curve, indicating a decrease in the quantity of goods and services produced at any given price level. Therefore, the correct answer is D - AS to decrease (move up and to the left).

An Increase in Regulation Will Cause