Which of the following will cause an increase in SRAS? a

Economics Dec 08, 2020

Which of the following will cause an increase in SRAS?

a. a decrease in labor productivity

b. an increase in employee wages

c. a decrease in government regulations on businesses

d. an increase in consumer spending

e. a decrease in investment spending

Expert Solution

The correct option is d. an increase in consumer spending

Explanation:

In the short-run, government actions do not influence the economy's supply level as government policies generally affect the economy in the long-run. If consumers decide to increase their consumption level, it will increase the demand for various items in the economy that will increase the price level. The increased price level will encourage producers to supply more in the short-run.

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