If government policies are to be successful in enhancing a country's long-run growth rate,they likely work through generating

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Government policies that enhance a country's long-run growth rate typically work by encouraging private investment in physical and human capital. This leads to an increase in productivity and potential output, which supports sustained economic growth over time. Other options, such as higher levels of current consumption or fiscal policies that shift the AD curve to the right, may generate short-term boosts in economic activity but are unlikely to have a lasting impact on the country's growth trajectory. A leftward shift in the AS curve would represent a negative supply shock, which would reduce output and slow growth.

If Government Policies Are to Be Successful in Enhancing a Country's