Final answer:
An increase in business subsidies (option B) would increase aggregate supply by reducing production costs and enabling businesses to supply more. A rise in the supply of loans (option C) increases the quantity of loans and can also lead to a decline in interest rates. Government regulations have multifaceted impacts on business operations and the labor market.
Step-by-step explanation:
The option that would increase aggregate supply is B. an increase in business subsidies. This is because subsidies reduce production costs for businesses, enabling them to increase their supply of goods and services. On the other hand, options A, C, and D typically decrease aggregate supply by increasing costs, reducing the capital available for production, and lowering the efficiency and output of businesses, respectively.
An increase in the quantity of loans made and received in the financial market would result from a rise in supply (C) of loans because it leads to more funds being available for borrowing. Similarly, an increase in loan supply would typically lead to a decline in interest rates because lenders are more competitive to offer their excess funds to borrowers, which can drive down the cost of borrowing (interest rates).
Government regulations can impact businesses by making it harder to start or expand, thus affecting hiring decisions and business operations positively or negatively depending on the extent and nature of the regulations.