Which of the following factors would be most likely to lead to a decrease in aggregate supply?

Question

BlackTom AI · Accepted Answer

An increase in firms’ tax rates raises their per‑unit cost of supplying goods and services, so choice c is correct.

1) Relevant concepts:
- Aggregate supply (AS) is the total quantity of goods and services firms are willing and able to produce at each price level. A shift in AS (left or right) reflects changes in production costs or productive capacity, not movements along the curve.
- Factors that shift AS left (decrease supply) include higher input costs, higher taxes on firms, reduced productivity, or a smaller labour force. Factors that shift AS right (increase supply) include technological improvements, higher productivity, and a larger labour force.

2) Step‑by‑step reasoning:
- Increasing the tax rate on firms effectively raises their marginal and average costs of production (taxes reduce after‑tax profitability or add to per‑unit costs).
- At any given price level, higher costs mean firms will supply a smaller quantity because some output becomes unprofitable.
- Therefore the entire AS curve shifts left (a decrease in aggregate supply), leading to lower equilibrium real output and, typically, upward pressure on the price level in the short run.

3) Calculations:
- No numerical calculation is required; this is a comparative‑statics reasoning about shifts in supply caused by cost changes.

4) Why the correct answer is correct:
- Option c describes a direct increase in firms’ costs through taxation. Cost increases reduce supply at every price, which is the textbook cause of a leftward shift in aggregate supply.

5) Why the other options are incorrect:
- a (lower costs from new technology): reduces costs/increases efficiency → AS shifts right (increase), not a decrease.
- b (higher labour productivity): raises output per worker → AS shifts right (increase).
- d (higher labour force participation): increases available labour and potential output → AS shifts right (increase).

Conclusion: An increase in the tax rate firms must pay would most likely decrease aggregate supply; thus the correct answer is c, matching the provided answer.

Which of the following factors would be most likely to lead to a decrease in aggregate supply?单项选择题

类似问题

Question at position 13 In the hybrid form of the combination structure, some divisions are oriented toward products while others are oriented toward market areasTrueFalse

Question at position 3 Weak ............................... protection in some countries implies that firms should expand overseas rapidly in order to preempt imitatorsproductpatentpolicyNone of the Above

Question at position 1 Netflix is trying to foster more growth by partnering with firms such as .............. for access to its hotel entertainment systems.Pearl ContinentalMcDonalds MarriottAll of the Above

If CPI in 2016 was 300, and CPI in 2017 was 312, what is the annual rate of inflation?

What is a budget deficit?

Refer to Figure 1 below and answer the question that follows: Figure 1: Monetary Policy Transmission Mechanism Which combination best fits into boxes 2, 3 and 4, respectively?

Which of the following factors may lead to demand-pull inflation?

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单