Shifts in Short-Run Aggregate Supply Curve

Steps:

• Equilibrium S is where initial AD intersects AS; T is new equilibrium with higher output and lower price level, indicating rightward AS shift.
• Identify factors shifting AS right: lower production costs or higher productivity.
• Evaluate options: seek combination increasing supply without major AD shift.
• Select B, as both elements enhance AS via productivity and cost reductions.

Why B is correct:

• Increase in education/training boosts labor productivity (AS shifts right per productivity definition); reduction in import tax lowers input costs (AS shifts right via cost reduction law).

Why the others are wrong:

• A: Consumer expenditure shifts AD right; combined with AS shift, effect on T ambiguous.
• C: Exchange rate increase (appreciation) shifts AD left; corporation tax cut shifts AS right, mixed impact.
• D: Consumer expenditure shifts AD right; import reduction unclear but likely shifts AD left, not pure AS move.

Final answer: B