When there is decrease in business costs and wage rates, the economy will experiences a decrease in the price level and an increase in real domestic output.
Usually when the aggregate supply increases, the economy experiences decrease in price level and increase in real domestic output because more output are at excess.
This will result to decrease in business costs and wage rates and thus, decreases in the cost of production.
When there is decrease in business costs and wage rates, the aggregate supply curve will shift to the right.
Therefore, when there is decrease in business costs and wage rates, the economy will experiences a decrease in the price level and an increase in real domestic output.
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