Regulations on the firm increase the cost of producing output. Reducing firm regulations will therefore lower input costs for firms since they will have fewer costs associated with compliance. The lower input costs increase short-run aggregate supply and shift the AS curve to the right.

Human capital, the knowledge and skills embodied in the workforce, is an important determinant of productivity. Improvements in human capital enhance productivity (output per hour of labor), causing firms to supply a higher quantity of aggregate output at each price level. Rising levels of human capital shift the AS curve to the right.

Lower input costs decrease the cost of production, enabling firms to supply a higher quantity of aggregate output at each price level. A decrease in input prices shifts the AS curve to the right.