Question

Which would most likely increase aggregate supply? a decrease in business subsidies a decrease in personal income taxes an increase in the prices of imported products an increase in productivity?

Answer 1

Increase in productivity 

Aggregate Supply refers to the total amount of goods and services that an economy's firms produce and supply over a certain period of time. This aggregate supply increases when there is an increase in productivity, either by increasing the quantity of scarce resources (i.e. labor), or by improving said resources through training and education. 

In economic terms, productivity refers to the amount of output a given quantity of labor can produce. A measure of productivity is GDP (Gross domestic product) per capita, which is a monetary equivalent of the market value of all the final goods and services that a certain population or economy produces over a certain period of time.

An increase in GDP per capita generally means that an economy is able to produce and provide more products and services (increase in aggregate supply) to the market. This also generally indicates a positive economic growth.