Question

Which would most likely increase aggregate supply? rev: 06_12_2018 Multiple Choice An increase in the prices of imported products An increase in productivity A decrease in business subsidies A decrease in personal income taxes

Answer 1

Answer:

An increase in productivity.

Explanation:

Aggregate supply is the total amount of goods supplied by producers in an economy, to be sold at a given period of time.

If the productivity (or the efficiency of production) of an economy increases, then there will be an increase in the amount of goods produced and a corresponding increase in the aggregate supply of that economy.

Answer 2

Answer: An increase in productivity

Explanation: Aggregate supply is defined as the total amount of goods and services that firms or businesses are willing to sell at a given price in an economy. It is affected by a range of factors including changes in productivity which is very important in the long run. The aggregate supply is shifted to the right on an increase in productivity because with improved productivity, firms can produce a greater quantity of output at every price level resulting in a greater quantity of real GDP produced. Productivity defines how much output can be produced with a given quantity of inputs and over time, it grows in such a manner that the same quantity of labor can produce even more output.