Which of the following will cause a decrease in aggregate supply?
A)A decrease in tax rates.
B)An increase in human capital.
C)An increase in the labour force participation rate.
D)An increase in factor prices.

Question

Quizplus · Accepted Answer

An increase in factor prices, such as wages, rent or raw material costs, will increase the costs of production, thus causing a decrease in aggregate supply by reducing the profitability of businesses. A decrease in tax rates, an increase in human capital, and an increase in the labor force participation rate all lead to an increase in aggregate supply.

Which of the Following Will Cause a Decrease in Aggregate