Which of the following will increase macroeconomic equilibrium prices?
A)a decrease in government spending.
B)an increase in productivity.
C)an increase in taxes.
D)an increase in input prices.

Question

Quizplus · Accepted Answer

An increase in input prices would lead to an increase in production costs, resulting in higher prices for goods and services. This would cause a shift in the aggregate supply curve to the left, resulting in a higher equilibrium price.

None of the other choices would directly result in an increase in macroeconomic equilibrium prices. A decrease in government spending (choice A) would lead to a decrease in aggregate demand, causing a leftward shift in the aggregate demand curve and a lower equilibrium price. An increase in productivity (choice B) would lead to a rightward shift in the aggregate supply curve, resulting in a higher level of output but not necessarily higher prices. An increase in taxes (choice C) would lead to a decrease in disposable income and a decrease in consumption, causing a leftward shift in the aggregate demand curve and a lower equilibrium price.

Which of the Following Will Increase Macroeconomic Equilibrium Prices