Final answer:
An increase in business subsidies would increase aggregate supply, while an increase in business regulation, a decrease in capital stock, and a decline in productivity would decrease it.
Step-by-step explanation:
Aggregate supply refers to the total amount of goods and services that producers are willing and able to supply at different price levels. Let's consider the options one by one:
- An increase in business regulation: Increasing business regulations typically lead to higher compliance costs and more restrictions on businesses, which can reduce their ability to produce goods and services. Therefore, an increase in business regulation would likely decrease aggregate supply.
- A decrease in the capital stock: The capital stock represents the total amount of physical and human capital available in an economy. A decrease in the capital stock can result from factors such as depreciation, obsolescence, or a decline in investment. This would reduce the productive capacity of the economy and decrease aggregate supply.
- An increase in business subsidies: Business subsidies involve the provision of financial assistance or incentives to businesses. By reducing production costs and providing support to businesses, subsidies can incentivize producers to increase their output. Therefore, an increase in business subsidies would likely increase aggregate supply.
- A decline in productivity: Productivity refers to the efficiency with which inputs are used to produce goods and services. A decline in productivity would mean that producers are becoming less efficient and producing fewer goods and services with the same amount of inputs. This would decrease aggregate supply.
In conclusion, out of the given options, an increase in business subsidies would increase aggregate supply, while the other options would decrease it.