Which of the following increases aggregate supply in the short-run, everything else held constant?

Question

BlackTom AI · Accepted Answer

Short-run aggregate supply (SRAS) shifts right when firms can produce more output at every price level, typically because per-unit production costs fall or productivity rises.

1. Relevant knowledge points and concepts
- SRAS: the relationship between price level and total output firms are willing to supply in the short run. A rightward shift = increase in SRAS (more output at each price).
- Determinants of SRAS: input prices (wages, energy), productivity/technology, expected inflation (affects wage setting), taxes/regulation, and supply shocks.
- “Increase” in SRAS means lower per-unit costs or higher productivity that make firms supply more at the same prices.

2. Step-by-step reasoning
- Evaluate each option by asking whether it lowers per-unit costs or raises productivity (shifts SRAS right) or raises costs/expected costs (shifts SRAS left).
- a) Higher crude oil price increases energy and transport costs for many firms → raises production costs → SRAS shifts left (decrease).
- b) Expectations of higher inflation lead workers to demand higher nominal wages and firms to anticipate higher costs; expected-cost increases shift SRAS left.
- c) A successful wage push raises wages and labor costs → per-unit costs increase → SRAS shifts left.
- d) Technological improvement that increases worker productivity means more output per worker, lowering per-unit labor cost and raising output at each price → SRAS shifts right (increase).

3. Calculations
- No numerical calculation required; effects are qualitative: productivity ↑ ⇒ unit labor cost ↓ ⇒ SRAS right.

4. Why the correct answer is correct
- Increased productivity directly reduces the resources (labor/time) needed per unit of output, lowering marginal and average costs for firms in the short run and enabling greater output at the same price level—this is exactly an increase in SRAS.

5. Why other options are incorrect (brief)
- a) Oil price increase raises costs → SRAS decreases.
- b) Higher inflation expectations usually raise expected wages/costs → SRAS decreases.
- c) Wage increases raise production costs → SRAS decreases.

6. Conclusion
Therefore the correct choice is d. a technological improvement that increases worker productivity, which matches the provided answer.

Which of the following increases aggregate supply in the short-run, everything else held constant?Single choice

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