Question

Which of the following supply shocks would shift the aggregate supply curve inward?​

a. A decrease in gasoline taxes​

b. A decrease in agricultural output​

c. A decrease in the amount and cost of government regulation​

d. A decrease in the cost of raw materials​

e. ​A decrease in business taxes

Answer 1

Supply Curve will shift inward only when there is a decrease in the supply

In options A,C,D and E there is decrease in taxes as well as decrease in the cost of raw of materials which means the supplier can produce more at a lower restrictions.

Only in option B if there is a decrease in the agriculture output which means there is a less supply in the market as well which will cause the supply shock and shift the supply curve inwards

Hence the answer is option B