-Choose the letter of the diagram in Figure 16.1 that illustrates the effects of supply-side policies designed to increase the capacity of the economy.

Question

Quizplus · Accepted Answer

In diagram b, the aggregate supply (AS) curve shifts to the right, indicating an increase in the potential output of the economy as a result of supply-side policies aimed at increasing the factors of production or productivity. This leads to lower inflation and higher output levels.

-Choose the Letter of the Diagram in Figure 16