Question

Which of the following will shift the aggregate supply curve to the right?

A. Productivity falls due to widespread illness.
B. The cost of metals imported from abroad decreases.
C. New regulations increase the cost of doing business for many firms.
D. The government reduces the corporate tax rate.

Answer 1

Answer: Option B

Explanation: In simple words, when there is a change in the quantity supplied of a product, that is, change in level of supply due to change in factors other than the price of the commodity is results in shift in supply curve.

When there is a positive change the curve shifts to right leading to increase in supply and vice-versa. In the given case, a decrease in the price of metals that were imported will lead to reduction in cost which will give the opportunity for the supplier to supply more due to higher margins than before.