Question

All of the following would cause aggregate supply to increase EXCEPT a. an increase in labor productivity. c. the development of new technologies. b. an increase in interest rates. d. a decrease in government regulation.

Answer 1

Answer:

B. an increase in interest rates.

Explanation:

Producers often need to borrow money in order to fulfill the order that they receive from the consumers. When there is an increase in interest rates, It become really hard for the producers to pay back the loan to sustain their production.

When this happen, most of them will choose to reduce the output of their production since they have no resource to fulfill more. This will cause the aggregate supply to decrease.